Westpac is to incorporate its banking operations in New Zealand, at the request of the Governor of the Reserve Bank of New Zealand (RBNZ), Dr Alan Bollard. The central bank rejected Westpac’s “buttressed branch” alternative proposal. This may oblige Westpac custody clients in New Zealand to sign fresh contracts.
“This decision comes after 12 months of intensive effort by both Westpac and the RBNZ to find a suitable alternative to local incorporation, and after 143 years of Westpac operating as a branch in New Zealand,” explains a Westpac spokesman. “Westpac is disappointed that the RBNZ found that its buttressed branch proposal is not acceptable. The local incorporation model requires the establishment of an entity with its own board.”
Westpac notes that, under the RBNZ’s Conditions of Registration for New Zealand incorporated banks, the New Zealand board is required to exercise its powers and perform its duties solely in the best interests of the locally incorporated bank – even where this may be in conflict with the parent bank.
Westpach expects to be incorporated in New Zealand no later than 1 October 2006.