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New Zealand - Banking

There two categories of financial institutions in New Zealand: registered banks and other financial institutions. The Reserve Bank of New Zealand does not fit in any of the two categories and acts as the central bank of the country. The role it plays is similar to that of the Federal Reserve Bank in the US or the Bank of England in the UK. Apart from managing the money supply, the Reserve Bank of New Zealand implements the financial policy of the country, controls the exchange rate, supervises commercial banks, and acts as a registrar for government stocks.

Saving banks in New Zealand were in the past mutual organizations owned by investors or members. They focused on mortgages for residential property and personal savings. The deregulation of the financial sector during the 1980s led to the introduction of commercial banks. Their expertise in marketing and expanded financial influence have made them dominate the financial market in the country making most saving banks to change to commercial or registered banks. The transformation of the industry has allowed people to easily access banking services, mortgages, and loans.

The two major banks in New Zealand are Australia-New Zealand Bank and the Auckland Savings Bank (ASB). ASB is has been rated the best in customer satisfaction for several years. Although it is Australian-owned, the bank of New Zealand is one of the largest banks in the country. The Westpac NZ and National Bank have the largest market share in the country.

Some banks are internet or telephone based. For example, PSIS is a financial institution owned by customers. It offers banking services that are operated by the Bank of New Zealand. The AMP insurance group also provides banking services. Around 12 percent of New Zealand banks are operated through indigenous banks. The banking operations of Australian banks are separate so clients of the Australian Westpac cannot gain access to their Australian accounts in the New Zealand Westpac.

Aside from local registered banks, there are a number of international banks that have branches in New Zealand. They are mostly located in Auckland and Wellington, which are the two biggest cities. Foreign-owned banks may not have branches all over the country. There are also leasing companies and merchant banks that cater to the business industry. They are not allowed to collect deposits from any registered banks or the public. Finance companies are not viewed as registered banks, but they provide credits such as time purchases and loans.

New Zealand banks are efficient. The staff are informal and friendly. Cashless banking has reduced the amount of cash going through bank counters. The banks operate from Monday to Friday from 9 am to 4:30 pm. Many banks do not open during weekends and public holidays.

Opening a bank account in New Zealand is easy and can be done either upon arrival in the country or prior to getting there. To open an account, you need to have a resident or work visa. You can open the account online in some banks while in others, you will be required you to present relevant documents in person. Unless you visit the bank in person, you will not be able to use your account for transfers or withdrawals. Other requirements for opening an account include a driver’s license, a passport size photo, and an opening balance of around 10 to 500 New Zealand dollars. If you have an IRD number from the Inland Revenue, you will be required to provide it as well. The IRD is not a mandatory requirement for opening an account, but you will pay a resident withholding tax of 33 percent without it.

If you plan to apply for an overdraft, mortgage, or loan in the near future make sure you get a reference from your home country’s bank manager. The reference will prove that your account has a steady flow of funds. Once you activate your bank account, you will be given a debit or credit card. Many New Zealand banks charge maintenance, ATM withdrawal, and manual transaction fees. Checks are not popular because many people have switched to online payment systems for direct transfers and for settling bills. It is advisable to minimize the number of cash transactions you conduct and use electronic banking to minimize bank charges. Find out if there is a flat fee option, which is cheaper if you have to conduct many transactions monthly.

Regular bills like gas, electricity, rent, mortgage, or telephone can be paid directly from your bank account. The bank gives you a form that you will need to complete and return. This serves to protect you from loss resulting from fraud or errors in the system. You can also open a safety box account, which you can use to store your valuables. The yearly rent for a deposit box is 50 New Zealand Dollars and above depending on the bank you use. In addition, it comes with a key bond of 80 NZD that you will have to pay for. Registered banks offer non-banking services such as pensions and life insurance and other services such as securities including bonds, shares, and stock.

The use of debit and credit cards is popular in New Zealand. Most hotels, shops, garages, and restaurants accept them. Credit and charge cards are given by most banks to people who are 18 and above. Some banks will only provide credit to clients with specific types of accounts. The service costs between one and dollar four dollars, and interest is charged from the date of withdrawal. International credit and debit cards including Diners Club, Visa, MasterCard, and American Express are accepted and used in New Zealand. You can safely walk around New Zealand without actual cash and still manage to shop.

Credit fraud is one of the biggest problems experienced by most banks. If you lose your credit card, report it immediately to the issuer. Credit card fraud is a serious offense and law enforcement agents usually protect people from liability in case they incur losses as a result of a stolen or lost credit card.

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