Latest / Early Edition with Ryan Bridge / Sam Stubbs: Simplicity Founder on the potential changes to banks' capital requirements

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Sam Stubbs: Simplicity Founder on the potential changes to banks' capital requirements · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: The arbian Z's giving capitals a second look. This is
• 0:03
  Speaker 1: for the banks, after pressure from the government looking at
• 0:05
  Speaker 1: easing the requirement so banks don't have to lock away
• 0:08
  Speaker 1: as much from emergencies. Could free up money for home loan,
• 0:11
  Speaker 1: small business lending, farmers. That sort of stuff could also
• 0:14
  Speaker 1: give smaller banks a shot at competing with the big players.
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  Speaker 1: Sam Stubbs simplicity founded with me this morning, Sam, good morning.
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  Speaker 2: Get a Ryan. How are you making good?
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  Speaker 1: Thank you? Does this really make the system potentially make
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  Speaker 1: the system riskier?
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  Speaker 2: Are in a very very small way. The Reserve Bank
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  Speaker 2: will still maintain extremely close control over anyone who calls
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  Speaker 2: themselves a bank and takes deposits. One of the interesting
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  Speaker 2: things about banking, Ryan, is anyone can make a loan.
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  Speaker 2: You don't have to be a bank to make a loan,
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  Speaker 2: but you do have to be a bank to take
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  Speaker 2: a deposit. And they've lowered the requirements. You've got to
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  Speaker 2: quit out five million dollars, not thirty million dollars, but
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  Speaker 2: that will be of capital, but that'll be very very
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  Speaker 2: tightly monitored, and it will actually cost a lot more
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  Speaker 2: than that to run some they caught a bank, so
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  Speaker 2: at the margin years, but not really.
• 1:00
  Speaker 1: So the current rules, well they look to be a
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  Speaker 1: bit harsh when you compare them to our countries. We
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  Speaker 1: like to compare ourselves to.
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  Speaker 2: The sort of I mean, we've got very safe banks,
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  Speaker 2: but we've also got massively profitable banks. And you know,
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  Speaker 2: I read these recommendations. To be honest with you, it
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  Speaker 2: feels something like the Reserve Bank we're having their arm
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  Speaker 2: twisted that they don't really want to do this, but
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  Speaker 2: the politicians have been lobbied very effectively by the banks
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  Speaker 2: into saying, look, you know, we need to have lower
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  Speaker 2: cost of capital. And the history of banking in New
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  Speaker 2: Zealand is as soon as banks say costs, they actually
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  Speaker 2: take it straight to their profit. They don't give it
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  Speaker 2: back to the customers. You know, you've seen that with
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  Speaker 2: bank branches. For example, your mortgage didn't go down because
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  Speaker 2: they were saving a whole lot of money closing closing
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  Speaker 2: rural branches. So this is something the banks want, so
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  Speaker 2: you have to be very suspicious of it. They lobbied
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  Speaker 2: very heavily for this. You've got to ask themselves what's
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  Speaker 2: their motivation. I doubt their motivation is going to be
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  Speaker 2: lower mortgages and higher term deposits. I think this is
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  Speaker 2: a way of them seeing how they another way seeing
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  Speaker 2: their profits, and in fact, the Reserve back themselves said, look,
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  Speaker 2: these recommendations we're making, or you're asking us to make,
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  Speaker 2: might save people maybe six one hundreds to fourteen one
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  Speaker 2: hundreds of one percent in their mortgage rates. So it's
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  Speaker 2: going to make a very very small difference at the margin,
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  Speaker 2: if at all. I personally think the banks will take
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  Speaker 2: this to profit. You know, they've already had very high
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  Speaker 2: capital requirements recently, and what have they done. You've seen
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  Speaker 2: their profits go up, so we'll imagine what they'll do
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  Speaker 2: if their cost of doing business goes down. Do you
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  Speaker 2: really trust them to give that back to the consumer?
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  Speaker 2: I don't. Good.
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  Speaker 1: Good point, Sam, Appreciate your time. Sam Stubbs, Simplicity Founder.
• 2:39
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• 2:42
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• 2:45
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