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Speaker 1: Anyone want to buy shares and Kibi Bank, you may

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Speaker 1: soon get the chance. Three options are on the table

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Speaker 1: for the government to increase Kibibank's capital and increase its

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Speaker 1: competitiveness with the big banks, Increasing government debt, third party

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Speaker 1: investment and putting it on the n z X are

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Speaker 1: all options for the Finance Minister, according to advice released

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Speaker 1: over the weekend from Treasury, which one is best? David

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Speaker 1: Trump and Massa University's banking expertise with US Live this morning.

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Speaker 1: Good morning, good morning, right, great to have you on

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Speaker 1: the program. David tell us which one you think is best?

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Speaker 2: Well, they all have their challenges. If the government raises

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Speaker 2: some additional funds in the market and pumps it in directly,

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Speaker 2: that's probably the most straightforward because it's it doesn't require

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Speaker 2: the involvement of anybody else to make a contribution. Did

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Speaker 2: the government is raising their debt funding all the time,

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Speaker 2: and it would just be sort of a part of

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Speaker 2: the debt funding they were raising. As to the the

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Speaker 2: the crown controlled organizations can involve, we did previously have

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Speaker 2: super funding the ACC investing in Kiwi Bank. They were

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Speaker 2: unhappy with the returns they earned and that's why last

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Speaker 2: year they managed to exit because they were happy with that,

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Speaker 2: and the similar issues apply with an index listing or

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Speaker 2: other private parties getting involved. The returns are not especially

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Speaker 2: good and that's one of the big challenges to floating

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Speaker 2: Gewi Bank on the as an I p O.

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Speaker 1: Why why their return is not good when the when

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Speaker 1: the Aussie ones appear to be.

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Speaker 2: Ah. The biggest problem is actually the matter of scale

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Speaker 2: and the cost of regulation and technology. What we actually

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Speaker 2: see is that all of the smaller banks struggle to

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Speaker 2: earn the sorts of returns being earned by the large banks,

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Speaker 2: and it's very much a consequence of the costs of

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Speaker 2: regulation and technology. If we go back twenty years, tsb's

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Speaker 2: costs were very much comparable with the all large Australian banks.

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Speaker 2: That has stopped being the case and the big Aussie

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Speaker 2: banks now have a big advantage in terms of cost.

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Speaker 1: So in trying to solve the big bank profit problem,

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Speaker 1: we are looking at a whole range of regulations that

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Speaker 1: could that perversely actually make the problem worse for the

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Speaker 1: smaller banks.

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Speaker 2: Well, we're putting additional regulations in place, is not really

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Speaker 2: going to improve anything, I don't think. On the other hand,

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Speaker 2: we don't really want to have small banks there that

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Speaker 2: are subject to less regulation because that increases the risk

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Speaker 2: of problems going wrong with them. So it's a bit

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Speaker 2: of a challenge working out how we're going to solve

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Speaker 2: this problem.

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Speaker 1: David Trite, Massi University banking expert, really appreciate your time

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Speaker 1: this morning. For more from Early Edition with Ryan Bridge,

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Speaker 1: listen live to news Talks it'd be from five am weekdays,

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Speaker 1: or follow the podcast on iHeartRadio.