Three finance companies are planning to merge to become a bank. At the moment, there is no name for this bank. The three finance companies are the Canterbury Building Society, Southern Cross Building Society and Marac finance which is owned by Pyne Gould Corporation. It would be listed on the stock market so that people could buy shares. The plan is to start the bank with $2.2 billion, 360 staff and 70 branches throughout the country. The new bank could be ready to open next year.
All our major banks are owned by Australia. After the BNZ was bought by the National Australia bank in 1992, the Taranaki Building Society was the only New Zealand owned bank for the next 10 years. Then in 2002, the government set up Kiwibank which has been very successful. Kiwibank branches are in Post Shops and some book shops so they don’t have to buy their own buildings or pay their own staff.
Many people were worried last week when the Minister of Finance and the Prime Minister said that the government might sell part of Kiwibank in the future. Before the 2008 elections, John Key promised that a National government would not sell any government owned companies before the 2011 elections. If Kiwibank is sold, shares could be listed on the stock market just like the new New Zealand bank.
Questions
Why are some people worried about the government selling companies which are owned by the government?
Does it matter if our major banks are Australian-owned?
People have many reasons to be concerned that governments companies may be sold to, especially, foreign companies. First, when banks like New Zealand bank, for example, are possessed by the government, they also belong to the whole nation and are reserved to work for New Zealanders. In contrast, when it become private, the benefit of the stock holders and private owners are the highest priority. Secondly, the government loses the power of controlling the country. For instance, private banks can increase or decrease loan rate based on the strength of market, despite the fact that this may pile more difficulties onto the economy in the crisis time. Finally, such of government companies are the icon of the nation. Therefore, selling a important, public business also shows the weakness of ruling its economy and society.