(20 December 2004 – New Zealand) Westpac has said it is “disappointed” with the Reserve Bank of New Zealand’s decision to reject the bank’s “buttressed branch” proposal.Instead, the bank will be obliged to locally incorporate its key operations, meaning the New Zealand business will need to operate as a separate entity with its own board.
Westpac has been trying to reach a compromise with RBNZ for the past 12 months, saying it had been operating quite happily as a branch in New Zealand for 143 years.
However, RBNZ governor Dr Allan Bollard has clamped down on the way Australian banks, which own the top five kiwi banks, run their New Zealand operations.
RBNZ has tightened laws to extract more taxation revenue from its top banks and insisted the banks operate as New Zealand rather than Australian businesses.
Westpac said it would begin to incorporate significant parts of its New Zealand operation but said it would take some time as “legislation will probably be required to incorporate”.
At the bank’s AGM in Auckland this week – the first time Westpac has held its AGM outside Australia in its 187 year history – chief executive David Morgan said the bank expected to post a 2005 result at the “upper end” of the banking sector.
He said changes within the bank over the past five years had placed the bank “firmly on the path to a sustainable competitive advantage and more resilient earnings growth”.