Latest / Best of Business / Claire Matthews: Massey University banking professor on whether the merger between Heartland and TSB will boost competition

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Claire Matthews: Massey University banking professor on whether the merger between Heartland and TSB will boost competition · Best of Business

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  Speaker 2: So Professor Cleare Matthews is the head of the School
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  Speaker 2: of Accountancy, Economics and Finance at Massi University and joins me, Now,
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  Speaker 2: good afternoon, Clear, Hi Andrew, So is this a goer?
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  Speaker 3: I don't see any reason why it wouldn't be. I
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  Speaker 3: think there are two good organizations and coming together provides
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  Speaker 3: them with some better scale that could enable them to
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  Speaker 3: make a difference.
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  Speaker 2: Well, how big would emerged bank be? They say they
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  Speaker 2: want to become a regional bank rather than the provincial
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  Speaker 2: bank that the TSB is. Right now, how would that
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  Speaker 2: size bank compare to the big guys?
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  Speaker 3: It's still tiny compared to the big four, and I
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  Speaker 3: think it's actually still smaller than Kiwi Bank is the
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  Speaker 3: combined entity, but it will be subset essentially bigger than
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  Speaker 3: either of the two individually, because it's going to be
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  Speaker 3: twice the size, and there'll be should be some economies
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  Speaker 3: of scale achieved by bringing the two together. And I
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  Speaker 3: think the regional is just about where their focus might be,
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  Speaker 3: which is potentially going to provide them with a point
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  Speaker 3: of difference relative to the Big Four.
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  Speaker 2: Yeah, well, both companies are known for their services to
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  Speaker 2: the rural sector. So firstly, how have farmers react to this?
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  Speaker 3: So I didn't think CHESE being particularly big with the
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  Speaker 3: rural sector to Heartland. Certainly, I'm not sure that they
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  Speaker 3: play a huge either of them really play a huge
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  Speaker 3: part in the rural market. But farmers, you know, if
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  Speaker 3: they're providing farming services, then the fact that they're regional,
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  Speaker 3: if they demonstrate that they've got a good understanding of
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  Speaker 3: the rural sector, then potentially farmers will be very interested.
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  Speaker 2: And if they concentrate on the rural will they give
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  Speaker 2: them a path of growth that could actually lure customers
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  Speaker 2: from the Big four.
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  Speaker 3: Potentially, the rural sector is quite a specialist sector in
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  Speaker 3: quite a narrow sector. Looking at the needs of the
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  Speaker 3: small and medium sized enterprises that operate through the throughout
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  Speaker 3: regional New Zealand is more likely to be a better
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  Speaker 3: option for them, I would think.
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  Speaker 2: Is this the comp petition that the industry and the
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  Speaker 2: government and everybody has been crying out for.
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  Speaker 3: It certainly increases the level, It potentially increases level of
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  Speaker 3: competition and therefore addresses some of the concerns that have
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  Speaker 3: been expressed, but the reality is that they are still small.
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  Speaker 3: It's not necessarily going to open up a huge access
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  Speaker 3: to capital, which is what's really needed for them to
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  Speaker 3: grow and to become competitive, truly competitive. But it will
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  Speaker 3: still make a difference, and it depends exactly what they
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  Speaker 3: offer and how they offer it to understand exactly how
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  Speaker 3: it might affect the level of competition.
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  Speaker 2: And how likely are the ComCom and stakeholders to wave
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  Speaker 2: this through by the end of the year like they're
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  Speaker 2: hoping for.
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  Speaker 3: I would expect it to get approval from the regulatory authorities.
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  Speaker 3: It's unclear that it's certainly not going to decrease competition.
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  Speaker 3: I wouldn't have thought, which tends to be the main concern,
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  Speaker 3: and I can't see that there would be any other
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  Speaker 3: concerns that the regularators might have. So I would anticipate
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  Speaker 3: that no, no, they might not get a straight through run,
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  Speaker 3: but that there shouldn't be any real complications.
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  Speaker 2: Well, thank you so much for your tome today, Professor
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  Speaker 2: Claire Matthew from Messi University. It's fourteen minutes after five.
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