In New Zealand, setting up Kiwibank was supposed to break apart this cosy bankers' club. It was a great idea, but sadly it has achieved exactly the opposite. It was always undercapitalised, with the burdens of its parent, the Post Office, choking its growth. The mere existence of Kiwibank has given the big four Aussie banks the perfect excuse to maximise profits. They could say to politicians and regulators, with hand on heart, that they were competing with a Government-owned bank, so it was a fair fight commercially. The reality is, Kiwibank was a one-armed boxer in the ring with four heavyweights. It could never compete in a way that got fees and lending rates down, and deposit rates up.
And then the aggrieved customers began to go to the politicians.
If we have differences we tend to try to deal with those with great care with a view to preserving the business relationship beyond the immediate issue. Politicians may well disagree with me but I'd argue that fundamentally the approach should not be much different when we have a divergence of views or concerns with a major trading partner.
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