NZ First’s plan to buy back the Bank of New Zealand has attracted scepticism – even downright ridicule – from across the political spectrum, writes Catherine McGregor in today’s excerpt from The Bulletin.

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BNZ plan leaves experts aghast

Writing on his Substack after Sunday’s NZ First campaign event, right-wing broadcaster Peter Williams – a former NZ First voter – set the tone: “The idea of buying back the Bank of New Zealand is just preposterous. Crazy. Off the planet loopy.” Infometrics’ Brad Olsen, speaking to RNZ, was a little more measured, calling it “headline-grabbing” rather than “serious policy”. Massey Business School professor Claire Matthews suggested Peters was “dreaming”, while former finance minister Ruth Richardson, now chair of the Taxpayers’ Union, was blunt: “It’s not a serious idea, it’s a bankruptcy of thinking.”

Much of the scepticism centres on cost – Peters put a figure of “$7.5 billion upwards” on the purchase, but as the Herald’s Jenée Tibshraeny reports, analyst estimates and comparable transactions put a more realistic figure at around $24 billion. Oh, and one other problem: NAB is not offering to sell.

What NZ First is proposing 

Peters’ core argument, outlined in his speech, is one of competition and sovereignty. Four Australian-owned banks control 85% of the NZ market, sucking billions in annual profits across the Tasman. The Commerce Commission has found that New Zealand’s banking sector is, in Peters’ words, a “structurally uncompetitive market” with “no sustained pressure to compete on price”.

NZ First’s solution is to buy BNZ from NAB, merge it with Kiwibank, and create a “National Bank of New Zealand” – Crown-owned but commercially run, funded through a blend of sovereign bonds, Crown debt, and NZ Future Fund and ACC investment. Peters said it was “not nationalisation – this is taking back our country”, and on Morning Report he dismissed critics as repeating “stupid, neoliberal, nitwit comments of the past”. As Massey’s Matthews points out, there has already been a rather famous National Bank of New Zealand – meaning Peters’ proposed name almost certainly isn’t available.

Would it even fix the problem?

Even if the purchase were achievable, analysts question whether it would fix what’s broken. Bernard Hickey in The Kākā argues that the huge profits enjoyed by the part-government-owned gentailers prove Peters’ assumptions wrong. A Crown-owned BNZ would still be required to maximise returns for its owner, meaning “you end up with exactly the same oligopoly, just with the government collecting a chunk of the dividends instead of Australian shareholders”.

Kōura’s Rupert Carlyon makes the same point: “We own the electricity companies and we still can’t get them to deliver for consumers and for everyday New Zealanders.” Simplicity’s Sam Stubbs, speaking to RNZ’s Susan Edmunds, says that instead the government should look at listing Kiwibank with NZ-only shareholders “and let KiwiSaver funds provide the billions required to make it a serious, publicly owned bank”, arguing that “public ownership does not have to mean government ownership”.

Hickey also points to online-only “neobanks” as the real missed opportunity – in the UK they’ve transformed competition, but in New Zealand the payment system is controlled by the big four, blocking new entrants’ access.

How BNZ ended up in Australian hands

The Bank of New Zealand began life in private hands in 1860 and got its first government bailout in the 1890s; it was fully nationalised by Labour in 1945. As recounted in a Treasury white paper, when Roger Douglas deregulated financial markets from 1984, BNZ went in hard – chasing corporate debt, expanding aggressively into Australia and taking stakes in Cook Islands tax haven vehicles. The 1987 crash left it catastrophically exposed. The Crown restructured the bank in 1989, before the incoming National government in 1990 confronted a fresh liquidity crisis – as rivetingly retold in episode one of Juggernaut season two. In 1992, the government sold its remaining shareholding to NAB for 80 cents a share.

“New Zealand built BNZ. Labour and National sold it,” Peters said on Sunday. What he didn’t mention is that by then it had cost taxpayers hundreds of millions in bailouts and the government wanted out. BNZ now generates more than $1.5 billion in annual cash earnings, which is precisely why Peters wants it back, and precisely why NAB has little obvious reason to sell.