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Speaker 1: Out of yesterday's interview with the Reserve Bank governor, it

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Speaker 1: came once again the question about the so called lack

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Speaker 1: of competition in the banking sector. Now, Andrew body has

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Speaker 1: been thinking about all of this and indeed submitting to

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Speaker 1: the government on the matter, because they're looking into competition

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Speaker 1: at the moment. As you well know, he's an investment

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Speaker 1: banker and a financial expert.

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Speaker 2: He is with us.

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Speaker 1: Andrew, very good morning to you.

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Speaker 2: Good morning Mike.

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Speaker 1: Simple stuff. First, is the a lack of competition and

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Speaker 1: does more players or do more players solve the issue?

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Speaker 2: Yes to both questions.

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Speaker 1: The barriers to entry, are they a problem?

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Speaker 2: Yes, the regulators have managed to create a moat around

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Speaker 2: the large banks in New Zealand, and that's through capital requirements,

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Speaker 2: the outsourcing requirements for the Reserve Bank, the branch policy

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Speaker 2: of the Reserve Bank, the prediential, a big part in

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Speaker 2: the conduct and disclosure regulation. It all increases that the

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Speaker 2: costs of operating here and favors the big banks.

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Speaker 1: So Adrian Orr is a conservative operator and he would

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Speaker 1: argue it's for safety. It's so that hunky players don't

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Speaker 1: come in and they fall over and everyone starts screaming.

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Speaker 1: Does he have an argument there or not?

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Speaker 2: Really, no, he doesn't have an argument. He's completely overcooked

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Speaker 2: the regulation that Basil three is the response of the

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Speaker 2: Bank of International Settlements a Basil Committee to the GFC.

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Speaker 2: And in New Zealand, we've taken Basil three and we

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Speaker 2: put it on steroids, and the rest of the world, sorry,

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Speaker 2: the rest of the world, partecularly the United States with Trump,

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Speaker 2: people are questioning whether Basil three is necessary, let alone

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Speaker 2: what steroid ridden predancial regulation has done in New Zealand.

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Speaker 1: When you put this forward to the government, do they

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Speaker 1: get it, do they understand it? And do they accept it?

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Speaker 2: I mean, the government's a big beast, Mike. You know,

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Speaker 2: you've got the administrative state there in the fall of

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Speaker 2: the regulators. You've got the advisors to to ministers, You've

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Speaker 2: got ministers. I think that the politicians actually get it.

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Speaker 2: I think that there is a natural response to the

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Speaker 2: regulators to say, you know, not a problem, let's move

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Speaker 2: on quickly. And the government's advisors sort of are missing

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Speaker 2: an action.

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Speaker 1: Real How much of this is Adrian or versus any governor?

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Speaker 2: Well, who knows. That's a good question. But who knows?

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Speaker 2: I guess I'm focused on what needs to change, and

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Speaker 2: I think I think that you know, the Minister of

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Speaker 2: Finance probably understands completely and she's focused on on change.

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Speaker 2: I expect it's just a question of how much and when.

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Speaker 1: Maybe if she does what you would like her to

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Speaker 1: do and what she seemingly argues she wants to do,

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Speaker 1: and they pull the pull the trigger tomorrow, do banks

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Speaker 1: flood to this country or are we not attractive enough

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Speaker 1: or big enough?

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Speaker 2: The margins suggest that there are excess profits being made here.

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Speaker 2: You know, I'm a big support of the banks. I

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Speaker 2: think the banks have done a great job. I think

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Speaker 2: the people running the banks are very confident people. But

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Speaker 2: they're playing with the decker cards that was issued to

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Speaker 2: them and they're making They've worked out how to do

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Speaker 2: that really well, and they're making excess profits. I think

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Speaker 2: they've really lost that argument, certainly in the public domain

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Speaker 2: and I think also in the technical technical domain, and

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Speaker 2: they need to move on from that position.

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Speaker 1: Yeah, confident or not, hopeful or not.

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Speaker 2: I'm always hopeful, make confident. I guess we just need

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Speaker 2: to watch what the politicians are doing really carefully and

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Speaker 2: encourage them to be brave.

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Speaker 1: Go on, you well, said, and nice talk to you.

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Speaker 1: Appreciate very much, Andrew. So here's another one who is,

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Speaker 1: and there's a lot of them, believe me. And this

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Speaker 1: is about banking specifically, but this is a more general

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Speaker 1: argument that are getting in the ear of the government

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Speaker 1: at the moment and going basically dog it, get in

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Speaker 1: there and blow some stuff up.

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Speaker 2: For more from the Mic Asking Breakfast, listen live to

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