Laughing banks want more of your money

We work hard for our money and we give it to a bank for safe keeping because it?s better than stashing cash under the mattress. Though not as clever as one enterprising woman of the night who converted her hard-earned cash to gold which she melted into a gold brick and stashed in full view by painting it black and using it as a door stop.

Our money is used by banks to make them more money than we could imagine.? Quote.

?ANZ made a record $1.99 billion profit in New Zealand in the past year.

The 10-digit result?is equal to almost 40 per cent of the profits made by the entire banking sector in New Zealand last year. End of quote.

The previous 2017 financial year was not shabby for New Zealand banks either.? Quote.

2017 was a good year for New Zealand banks.

KPMG’s latest Financial Institutions Performance Survey shows the country’s banks had a 7.35 per cent profit boost last year on the year before.

They made a record combined $5.19 billion in the year. End of quote.

Laughing bank image credit

If you thought your money was safe in a bank, you should think again.

Over two year?s ago Bernard Hickey warned: quote.

New Zealand briefly had a government guarantee for retail bank deposits from October 2008 to December 2011. It was introduced at the worst point in the Global Financial Crisis to stop a run of deposits across the Tasman to the banks’ parents in Australia, where the Kevin Rudd Government offered a guarantee for depositors there.

It was quietly dropped once global markets had settled down and was replaced by a system called ‘Open Bank Resolution’.

This means there is no Government guarantee and if a bank was to fail, the Reserve Bank would shut it down and manage a capital restructure overnight so that it could re-open the next day. One way a bank’s capital could be restructured by the Reserve Bank is through a ‘hair-cut’ for depositors. Essentially, the Reserve Bank would slice a certain percentage – say 10% – off the value of term deposits to allow the bank to re-open with enough capital to survive.? End of quote.?

Guess who loses out if that happens?

James Shaw is pushing for us to adopt a scheme whereby it would be mandatory for investors to pay for insurance to protect their own money. A newspaper reports.Quote.

[Shaw] said it is an important area to explore, given the fact financial systems can often be unpredictable.

“Now Israel has a deposit insurance scheme, we’re the only [developed country] now that doesn’t have one.”

Before the election, the Greens had a deposit insurance policy whereby consumers would pay $5-$10 a year to be insured by up to $250,000.

The International Monetary Fund (IMF) had also recommended New Zealand adopts such a scheme.

In a report on New Zealand’s financial stability last year, the IMF said to enhance New Zealand’s credibility and strengthen the financial safety net, “the introduction of deposit insurance would be the best option”.

Shaw said if the consultation document comes back with a lot of support for a deposit insurance, it should be made law.? End of quote.

Call this what it is ? an extra bank fee!

Banks are clearly laughing at their naive kiwi customers.? We are paying higher bank charges than our Aussie neighbours and now we are expected to pay even more in fees?? Quote.

New Zealand?customers are delivering better profits for the big banks than their counterparts in Australia.

An analysis of data released to?Stuff?by the Reserve Bank shows that?compared?to gross domestic profit (GDP), the big four Australian banks are 26 per cent more profitable in New Zealand than they are in Australia.? End of quote.

It?s bad enough that my money is not my money anymore when I give it to a bank.

By all means, make the insurance mandatory, but make the bank pay for it out of their profits.? Or better still, let?s redesign the banking system so that our money is protected and while we are about it put controls in place restricting bank fees.

Where, oh where can we find a sensible politician who will put a stop to this madness?

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