The Impact of New Zealand banks
New Zealand’s banking system has its roots in continental Europe. The first trading bank (the union bank of Australia) was established in 1840. After 1860, a numbers of other Australian and British banks followed, three were British overseas banks, two were Australian and one was local. Therefore the New Zealand banking sector has a long history of foreign ownership
The government began to ease the restrictions of financial institutions from 1975, and the deregulation of banking was introduced in 1986, the main effect of the deregulation programme was to remove the legislation that restricts competition within finance sector. Since 1987 there have been only two categories of financial institution: register banks and non-bank financial institutions. All banks have to be registered with Reserve Bank of New Zealand. The Reserve Bank has implemented an open door policy in 1987, therefore, the number of banks has increased significantly as new foreign banks have entered and domestic savings institutions have converted to bank status. Today, there are 15 foreign-owned banks were register with Reserve Bank of New Zealand four major Australian owned banks— ASB Bank, Australia New Zealand Bank (ANZ), BNZ, Westpac Trust, control about 85 percent market share at 30 Sep 2000(KPMG 2004). The one domestically owned bank—TSB Bank—is a small retail bank ASB
ASB bank is one of the New Zealand’s commercial Bank and with reported total assets of NZ$59.35 billion (as of 30 June 2008), ASB Bank is one of the five large retail banks operating in the New Zealand market. It began in 1847 as the Auckland Savings Bank. During the 1980s the association of savings banks amalgamated the local savings banks throughout New Zealand with ASB at their head, and adopted the name, ASB Trust Bank. In 1989, the ASB Bank Community Trust, the owner of the bank, sold 75 per cent of the shares to Commonwealth Bank. In 2000, Commonwealth Bank bought the remaining 25 per cent of ASB's shares from the Trust. In 2005 the bank changed the ASB Bank brand to ASB to reflect the more integrated financial services provider that it had become. Before ASB Bank Community Trust approached Commonwealth Bank in Australia, Commonwealth Bank did not have any plans to acquire ASB and the idea of ASB Bank Community Trust became an opportunity for Commonwealth Bank to enter into New Zealand market. The Commonwealth Bank’s expansion to New Zealand reflected the first strand of IO theory, banks expand aboard to protect and maintain their relationship with customers, which reflected increased trade and investment between Australia and New Zealand (Tripe and Matthews 2003). ASB used to base in Auckland city and expanded their branches cover the whole of New Zealand for past twenty years, the growth of asset was increased for past twenty years, hence even ASB’s operation are profitable, but it still not reach it’s benchmark 1 percent return on asset for first year years after it was acquired by Commonwealth Bank. ASB had achieved its benchmark in 2002 (ASB Annual Report). ASB’s deposit increased 13% in 2009 and the strength of the ASB brand has been instrumental in helping the Bank to attract strong funding from New Zealanders, with well over half of ASB’s advances being funded from local savings and investments, the brand of Commonwealth Bank does not help too much. Therefore, the advantage of acquirsition is not obviously and the commonwealth bank’s expansion cannot be adequately explained by any one theory alone (Tripe and Matthews 2003). Westpac
Westpac was founded in 1817 in Australia and was incorporated in 1850 as the Bank of New South Wales. In 1861 the Bank of New South Wales opened seven branches in New Zealand. In 1982, the Commercial Bank of Australia joins the Bank of New South Wales in New Zealand and the Bank changed its name to Westpac. During the early 1990s, because of incresed exposure to bad loads, Westpac had lost its leading...
Bibliography: Aliber, R.Z., 1984. International banking, a survey. Journal of Money, Credit and Banking 16, pp. 661–712
ANZ Bank Limited. (1989). Annual report (1989)
ASB Bank Limited
Buckley, P. and M. Casson (1976). The Future of the Multinational Enterprise, London, MacMillan.
Casu, B., Girardone, C. &Molynuex, P, 2006. International banking. Chapter 4 in Introduction to banking, pp.76-104
Claessens et al., 2001
Coubeck, N (1984). The multinational banking industry. London: Croom Helm
Demirgu¨ c¸-Kunt, A., Huizinga, H., 1999
Dunning, J. H. (1988). “The Eclectic Paradigm of International Production: A restatement and some possible extensions”, Journal of International Business Studies 19(spring): 1-32.
Gray,J.M and Gray,H.P (1981)
Huong. Minh To, D. Tripe .,2002 Factors influencing the performance of foreign-owned bank in New Zealand Int. Fin. Markets, Inst. and Money 12 (2002) 341–357
Levine, R., 1996. Foreign banks, financial development, and economic growth. In:
Rugman, A.M (1981). Inside the multinationals: the economics of internal markets. London: Croom Helm.
Stijn Claessens, Aslι Demirgüç-Kunt and Harry Huizinga., 2001. How does foreign entry affect domestic banking markets?
Tripe, D & Matthews, C., 2003
Williams, B., 1997. Positive theories of multinational banking: eclective theory versus internalization theory. Journey of Economic Surveys. 11(1). 7-100
Please join StudyMode to read the full document