A law proposed by New Zealand First would require banks to lend to fossil-fuel sectors and could imprison employees for denying loans on environmental or governance grounds.
The Financial Markets Amendment Bill aims to prevent financial institutions from refusing services based on political views, ESG (environmental, social and governance) considerations, or industry type. But it doesn’t define what commercial reasons are valid and may conflict with other existing regulations.
Banks would only be allowed to deny a loan if they could demonstrate a "valid and verifiable commercial reason” and individual employees could be fined or imprisoned for breaching the law.
The Bill aims to address complaints from farmers, petrol station operators, and fossil-fuel companies who argue that bank climate policies are limiting access to financing. This has frustrated the Government, which wants to grow the mining, oil exploration, and agriculture sectors.
The loosely drafted Member’s Bill must either be drawn from the ballot or be supported by the Government for a vote. It’s unlikely to be debated seriously and may serve mostly as a warning to banks.
NZ First MP Shane Jones said he would consider proposing a law change after learning that BNZ planned to stop providing banking services to a coal mine by 2030. Parliament’s banking inquiry also revealed the bank was exiting petrol station lending that same year.
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Last week, Prime Minister Christopher Luxon told Newstalk ZB that all three coalition parties were in lockstep on bank lending and that he wanted top executives recalled to the banking inquiry for further questioning.
Cameron Brewer, newly-appointed Chairman of the Finance and Expenditure Committee, said he would discuss making this happen with his colleagues on the committee.
"It's fair to say that frustration is palpable from the Prime Minister and Finance Minister down, and so there certainly is some political appetite to get the big bank CEOs and Chairs before the Committee again,” he told Interest.co.nz.
Federated Farmers are also expected to present their concerns about the impacts of the Net Zero Banking Alliance, which they believe has caused the debanking of rural petrol stations.
“Sadly, this is not some academic argument. There are genuine concerns that legitimate and essential businesses to our economy and social fabric could struggle to access bank lending and transactional support,” Brewer said.
“Their policies and practices deserve full scrutiny, and so as the new chair I would like to at least see the four big banks back before the Committee, but I'll test that with my colleagues when Parliament resumes”.
Luxon hasn't endorsed NZ First’s lending law but told Newstalk ZB he was “open to looking at whatever we need to do” and that banks shouldn’t decide what sectors deserved financing.
“Their job is to finance the things that New Zealanders need. These are legitimate businesses. If you don't want to finance a mining company, well, we need critical minerals to actually make the transition to clean energy and we want economic growth,” he said.
The Finance and Expenditure Committee resumes its banking hearings on Wednesday with submissions from Simplicity and the Banking Reform Coalition.
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