August 21, 2024 – Wellington, New Zealand — The New Zealand government has vowed to take decisive action against the dominance of the country’s top four banks, all owned by Australian institutions, following a critical report from the Commerce Commission. The report, published on August 20 after a 14-month market study, described the banking industry as a “stable, highly profitable, two-tier oligopoly” with minimal price competition, and proposed 14 recommendations to address the imbalance.

Key recommendations include boosting capital for Kiwibank, New Zealand’s fifth-largest bank, and urging the Reserve Bank of New Zealand to lower entry barriers for new institutions. The report also emphasized the importance of establishing open banking channels by 2026 to foster greater competition.

Finance Minister Nicola Willis criticized the major banks for their lack of competition and innovation, stating that New Zealand customers are at a disadvantage compared to their Australian counterparts. The government is committed to implementing all of the Commerce Commission’s recommendations, including exploring ways to increase Kiwibank’s capital through various investment channels.

Kiwibank, the largest state-owned lender in New Zealand, currently holds around 7% of the home loan market and has been the only major lender to experience steady growth in recent years. The government is also encouraging the development of neobanks and digital-only financial services providers to increase competition in the sector.

Commerce and Consumer Affairs Minister Andrew Bayly highlighted the government’s commitment to expediting loan processing and meeting the open banking deadline, which he believes will significantly disrupt the current market dominance and promote long-term competition.