Latest / Early Edition with Ryan Bridge / Claire Matthews: Massey University Banking Expert on Kiwibank gaining approval to gain new capital

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Claire Matthews: Massey University Banking Expert on Kiwibank gaining approval to gain new capital · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Good news for banking competition, Well, hopefully good news for
• 0:02
  Speaker 1: banking competition, the government giving the green light for a
• 0:05
  Speaker 1: capital injection from the private sector, Cabinet approving raising half
• 0:09
  Speaker 1: a billion, five hundred million dollars through QYP saver funds
• 0:12
  Speaker 1: and investment groups with the hope of finally making the
• 0:15
  Speaker 1: bank competitive with the Big four of the Aussies. Claire
• 0:18
  Speaker 1: Matthews is Associate professor at Massi University Business School, a
• 0:21
  Speaker 1: banking expert. Clear, good morning, Marina iron. Is this going
• 0:25
  Speaker 1: to shift the dial in terms of its competitiveness? How
• 0:29
  Speaker 1: rgibargie it can be in market?
• 0:33
  Speaker 2: Well, it's sitting in to make a difference. We're talking
• 0:35
  Speaker 2: about increasing its capital by around seventeen percent, but in
• 0:39
  Speaker 2: reality it's still going to be substantially smaller than the
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  Speaker 2: Big four Australian banks. It's obviously going to be able
• 0:45
  Speaker 2: to do more lending, and if it can do a
• 0:47
  Speaker 2: substantial amount more lending then it can be challenging in
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  Speaker 2: terms of what it offers, but it's not going to
• 0:56
  Speaker 2: take it anywhere near the size of the Big four,
• 0:58
  Speaker 2: So the extent of which to which it will actually
• 1:01
  Speaker 2: impact on competition is questionable.
• 1:04
  Speaker 1: How do you get it there, do you need to
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  Speaker 1: put it on the stock market, as Nicola Willis is
• 1:08
  Speaker 1: sort of indicated, is potentially an option.
• 1:12
  Speaker 2: We're still talking a huge amount of increase in capital
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  Speaker 2: that would be required in order to get it to
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  Speaker 2: anywhere like the size of the Big Four, enabling it
• 1:22
  Speaker 2: to grow and enabling it to do more lending. Whether
• 1:25
  Speaker 2: it's through this capital injection or additional capital through an IPO,
• 1:29
  Speaker 2: that's all going to help. But as usual, we're overstating
• 1:34
  Speaker 2: the competition issue in the market in my view, because
• 1:39
  Speaker 2: we do have a competitive market. Queibank is making a
• 1:42
  Speaker 2: difference as it is. Yes, it will make a bit
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  Speaker 2: more of a difference if it's able to do more.
• 1:49
  Speaker 2: But whether we're going to see a huge change in
• 1:52
  Speaker 2: terms of what's happening in the banking market, I just
• 1:55
  Speaker 2: don't see that it's going to happen.
• 1:57
  Speaker 1: Is that because it's starved of capital or because we're
• 2:01
  Speaker 1: just a small country.
• 2:05
  Speaker 2: It's probably not either of those things. It is certainly
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  Speaker 2: a challenge for Keevy Bank in terms of its capital
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  Speaker 2: situation because in order to do leaning it needs capital
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  Speaker 2: and it can only generate so much from its normal operation.
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  Speaker 2: So getting more capital as a capital injection helps. We
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  Speaker 2: are a small country, but that's not actually accepting a
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  Speaker 2: competition issue. We have a good number of banks that
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  Speaker 2: they are competing. We seem to perceive that just because
• 2:31
  Speaker 2: they're making lots of money that that's not competitive. That's
• 2:35
  Speaker 2: not necessarily the case in my view, and the challenge
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  Speaker 2: is that Keevy Bank is just a small bank, and
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  Speaker 2: at least you've got something a similar size to the
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  Speaker 2: big four, You're not really going to have a competitive
• 2:49
  Speaker 2: difference with my view.
• 2:51
  Speaker 1: Interesting, Clear appreciate that, Clear Mathews as I said, professor
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  Speaker 1: at mass University Business School.
• 2:56
  Speaker 2: For more from Early Edition with Ryan Bridge, listen live
• 2:59
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• 3:02
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