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Greens: Bank Guarantee Should Halt Dividend Flows Offshore

Contributor:
Fuseworks Media
Fuseworks Media

23 October 2008 - ANZ's $3.3 billion annual profit reinforces the Green Party's call for a limit on dividends flowing out of New Zealand into overseas investors' pockets, now the New Zealand taxpayer is shouldering the risks of the banking sector's behaviour.

"We must ensure our banks maintain maximum liquidity at a time of great uncertainty - now their risks are underwritten by the New Zealand taxpayer through the deposit guarantee scheme," Green Party Co-Leader Russel Norman says.

"Over the last three years, ANZ has sent over $2 billion in dividends out of the country to their Australian parent company. At times, this has amounted to up to 84 percent of its profit.

"The Green Party is committed to the deposit guarantee scheme providing stability to the finance sector. In return taxpayers now expect increased transparency from our banks. Paying large dividends in light of the current situation is highly questionable."

"The dividend moratorium should apply across the sector so as not to send the wrong signals to investors that individual banks are in trouble," Dr Norman says.

"We also need to examine why some bank employees are paid over $2.5 million a year - in the case of ANZ National. If taxpayers are to underwrite the banks to the tune of $150 billion then in return banks need to show some restraint with their multi-million dollar pay packages.

"Executive pay bonus schemes that encourage short-term, high-risk behaviour need to be purged from the industry entirely.

"The bank workers' union Finsec has done some good work in the area of further banking reform. Some of their recommendations include:

Establishing an independent Financial Consumer Agency to oversee the financial sector

Establishing a New Zealand Code of Lending Practice

Establishing a Code of Social Responsibility for the finance industry

Strengthening the role of the Reserve Bank to license and supervise financial institutions' lending practices."

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