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Speaker 1: The long road to some sort of disruptibility in the

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Speaker 1: banking Sector's got a new idea. Let's float Kiwi Bank.

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Speaker 1: That's the thinking. Documents released by Treasury suggest if you

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Speaker 1: stuck the bank on the share market, we'd all invest,

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Speaker 1: would we? They would get the money to get amongst

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Speaker 1: the big players and bring about the utopian present so

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Speaker 1: many seem to think will make some sort of difference.

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Speaker 1: Massive University Associate Professor Clear Matthews is with us. Clear,

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Speaker 1: very good morning to you. What end am ike as

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Speaker 1: an idea?

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Speaker 2: Do you like it? I guess I'm probably a bit

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Speaker 2: on the fence. On the one hand, if we think

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Speaker 2: we want to really get Kiwibank doing something in the market,

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Speaker 2: then they need capital and it's a sensible way of

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Speaker 2: doing that. Whether there's any value in trying to actually

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Speaker 2: do that with Key Bank, it's a different issure.

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Speaker 1: Sea, I sit on the fence with you. I can't.

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Speaker 1: There is no guarantee that making no matter what mechanism is,

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Speaker 1: there is no guarantee that making Kiwibank bigger would automatically

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Speaker 1: mean anything, would it? Apart from the fact that gets bigger.

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Speaker 2: Well, that's right, I mean, if it's bigger, it's going

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Speaker 2: to be able to operate at a similar level to

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Speaker 2: the other banks are the other big banks. But whether

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Speaker 2: that's actually going to make a difference. Whether they're just

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Speaker 2: going to become like the other big banks and make

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Speaker 2: those sorts of profits, which might be good because then

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Speaker 2: the shareholders including government would get bigger dividends. That might

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Speaker 2: be good. But where that would actually make a real

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Speaker 2: difference in terms of how the banking market operates. I

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Speaker 2: guess we won't know unless it happens.

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Speaker 1: No, the Big four versus the Big five, what difference

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Speaker 1: would there be.

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Speaker 2: There'd be an extra bank in there. One of them

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Speaker 2: is New Zealand. One of them is New Zealand owned it.

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Speaker 2: Because it's bigger, because it's got more capital, it may

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Speaker 2: be able to do things slightly differently.

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Speaker 1: Explain Explain to us in what way? Because I mean,

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Speaker 1: if I can go to Kiwi Bank and get a

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Speaker 1: mortgage now the same way am ZB and Z or Westpac.

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Speaker 1: People have decided they do or they don't. It's not

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Speaker 1: been particularly successful patriotically speaking. If they were bigger, what

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Speaker 1: would they do they can't do now.

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Speaker 2: They give them capital to to try different things. So

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Speaker 2: what they might do. I mean that's crystal ball gazing,

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Speaker 2: and so I don't know what sort of things they

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Speaker 2: might be thinking about trying. But in reality, banking is banking,

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Speaker 2: and so there are limited opportunities. So it's difficult to

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Speaker 2: see exactly what they would do differently if they've got

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Speaker 2: more capital. But this is seen as being one of

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Speaker 2: the things that can be done to try and make

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Speaker 2: the banking sector or competitive, although I would argue that

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Speaker 2: it is actually already quite competitive. I know others don't agree,

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Speaker 2: and so it is really difficult to see really in

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Speaker 2: reality how much difference it would actually make. But if

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Speaker 2: it's seen as important, it's a way to do it.

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Speaker 1: I take it your following the Banking inquiry like I am,

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Speaker 1: and I heard last week. I mean, the government seems

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Speaker 1: to have made up their mind there's something wrong with

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Speaker 1: banking and they need to do something which brings in

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Speaker 1: a political aspect, doesn't it Absolutely?

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Speaker 2: But I don't think it's just the government that's decided

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Speaker 2: there's something wrong with banking. I think to an extent,

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Speaker 2: all the political parties sitting something wrong with which reflects

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Speaker 2: the fact that the New Zealand population.

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Speaker 1: But we can't explain why though, clear we've just been

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Speaker 1: told there's something wrong, and we go, oh yeah, something

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Speaker 1: wrong with them, and you go, well, like what you

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Speaker 1: and as you've just tried to articulate, you're an expert

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Speaker 1: and you can't explain it. We've got heaps of banks.

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Speaker 2: What scene is the problem is the fact that they

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Speaker 2: make lots of money and what people's successful. They are

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Speaker 2: huge organizations that are working with a lot of money.

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Speaker 2: They make a reasonable amount, and they need to make

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Speaker 2: a reasonable amount because of they don't make enough money.

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Speaker 2: The parent men will say, what's the point of being

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Speaker 2: in New Zealand. It's such a small part of our operation,

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Speaker 2: it's not worth our while. Let's get rid of it.

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Speaker 2: And then New Zealand would.

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Speaker 1: Be a lot worse off, which goes back to my question,

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Speaker 1: how come you can work this out and I can

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Speaker 1: work it out? Not not defending the banks, but I mean,

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Speaker 1: it just seems to me. I'm open to an argument

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Speaker 1: from somebody that goes explain to me cohesively why there's

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Speaker 1: such a problem here, and I just can't see it.

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Speaker 2: I can't help you.

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Speaker 1: And by adding another bank, I don't know what it solves.

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Speaker 1: I mean, I maybe I get to invest in Key

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Speaker 1: with a bank WHIPPEDI do what difference does that make

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Speaker 1: to anybody apart from the fact I get to invest

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Speaker 1: and they get to make some money and maybe they

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Speaker 1: get bigger. But you know, we still have the so

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Speaker 1: called broken model. If you believe the model is broken.

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Speaker 2: Absolutely, so it's really difficult to see in reality what

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Speaker 2: difference it would make, what practical value there would be. Okay, So,

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Speaker 2: but if it's done, it's good for the government. It

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Speaker 2: makes it look like they're doing something, looks like they're

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Speaker 2: responding to what the public want, and so therefore that's

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Speaker 2: going to be better.

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Speaker 1: Okay, all right, clear, we can go about our day now.

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Speaker 1: This is excellent. Clear Matthew's associate professor at Massi University

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Speaker 1: Business School. I mean, do you disagree. I mean, everybody

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Speaker 1: goes our banking is broken. Is it explain to me how?

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Speaker 1: For more from the Mike Asking Breakfast, listen live to

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