A former chief executive of Wattie’s says New Zealand’s banks are falling behind their Australian counterparts and aren’t doing enough to support small and medium-sized enterprises (SMEs).
David Irving, who was one of seven business leaders inducted into the NZ Business Hall of Fame in Auckland on Thursday evening, told attendees the more than 600,000 SMEs in NZ are operating and competing on an uneven playing field.
“I don't think that the banks are doing enough by them,” he said.
Irving compared NZ’s business bank lending to Australia’s and said only 18% of total bank lending in NZ is to business.
“When I look at it in Australia, it's something like 30% is on business. And if I go to the OECD countries, it's much more than that.”
The four Australian-owned NZ banks – ANZ NZ, ASB, Westpac NZ and BNZ – are responsible for 84% of total bank lending across the country.
According to the Reserve Bank (RBNZ), SME lending makes up 23% or $138 billion, in total bank lending and around 36% of that is property-related.
The RBNZ reported in its May Financial Stability report earlier this year that SME lending is distributed across agricultural borrowers (40%), commercial property owner/operators (29%) and all other businesses (31%).
Irving said when banks in NZ lend money to SMEs, they look at what the business is doing, “but then they say to themselves, we've got to go past the assets of the business as the security.”
Banks often use people's personal assets – like property – as security for business loans, which means smaller business owners often borrow against their personal house to fund their business.
Irving said this was a practice that puts people’s homes “at risk.”
“So limited liability is overcome by a personal guarantee of some sort,” he said. And now [business owners] are living with the risk of their home and their property as well as their business.”
Residential mortgage-secured business lending is a common product offered by banks. According to the RBNZ’s latest financial stability report, it currently amounts to $5 billion, or around 11% of total bank lending to SMEs – excluding agriculture and commercial property,
Irving said interest rates being charged to NZ SMEs are also much higher than interest rates in Australia for equivalent businesses.
“Yet they’re coming out of the same banks,” he said.
The RBNZ analysed the difference between NZ SME interest rates and those in Australia in its latest financial stability report.
It found that over the past three years, NZ SMEs have been charged spreads of 390 basis points and 280 basis points above the 90-day bank bill rate, respectively, compared to 294 basis points and 192 basis points in Australia. The 90-day bank bill rate is NZ’s benchmark wholesale interest rate.
“I really think we've got to look at the circumstances of lending, and we've got to do this in a more fair way,” Irving said.
Revolut, the British-headquartered fintech that launched in NZ three years ago and has ambitions to become a registered bank, told interest.co.nz in June that many NZ businesses are struggling to get the lending they need from banks to help them grow.
“When they do get it, it's at astronomical rates,” Revolut’s head of New Zealand Georgia Grange said at the time.
Plugging the NZ Super Fund into SMEs
On Thursday, Irving also called for the NZ Superannuation Fund to throw more money behind SMEs.
The vast majority of the NZ Super Fund’s portfolio is invested internationally and Irving said the NZ Super Fund could be getting “good returns” if it invested in more NZ companies.
“We've just got to even the playing field for SMEs,” Irving said. “I think they've become the wallpaper.”
The NZ Super Fund is a sovereign wealth fund managed by the Guardians of New Zealand Superannuation. It was established in 2001 and currently has over $95 billion in total assets. As at 30 June 2024, the Government had contributed a total of NZ$26.55 billion to the NZ Super Fund.
The Fund invests internationally and locally to help pay for future universal superannuation pension costs, reduce future tax burdens and grow the nation’s wealth. It delivered an annual return of 17.03% during the May 2026 financial year.
Irving suggested the country could even do with a venture fund that holds SMEs.
“We mustn't lose these businesses from our local communities, from downtown parts of New Zealand. They're better off in our hands and with good owners who know how to run them properly than in businesses and [with] investors that may not have our interests at heart,” he said.
Irving spent over 20 years at Wattie’s, one of the country’s most well-known food producers, starting as company secretary and leaving the business as chief executive. He was CEO when Wattie’s was acquired by the gargantuan American food processing company Heinz in 1992. Heinz is now known as Kraft Heinz, following a multi-billion-dollar merger in 2015.
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