NBDT CEOs Present Key Insights to Parliament on Banking Competition
This morning, Daniel McGrath, CEO of Xceda, joined other Non-Bank Deposit Taker (NBDT) leaders in presenting to Parliament's Finance and Expenditure Committee (FEC) as part of the inquiry into banking competition in New Zealand. Their collective insights underscored the critical role of NBDTs in fostering competition while addressing significant regulatory challenges.
The Role of NBDTs in Banking Competition
Daniel emphasized that NBDTs are prudentially regulated, similar to banks, and have successfully operated under post-global financial crisis regulations designed to protect consumers. He highlighted how institutions like Heartland Bank and Cooperative Bank originated from the NBDT sector, demonstrating its role as an incubator for future banks.
Recommendations for Regulatory Change
The CEOs proposed several key reforms to create a more level playing field:
- Proportionality in Regulation: Adjusting regulations to better reflect the scale and risk profile of smaller deposit takers.
- Access to RBNZ Infrastructure: Granting NBDTs access to essential Reserve Bank infrastructure, including payment systems.
- Equal Risk Weightings: Ensuring lending risk weightings are at least on par with those of traditional banks.
- Naming Rights: Allowing NBDTs to identify as banks, removing the "non-bank" label, which can mislead consumers.