Too big to fail. The risks to Australian taxpayers from New Zealand banks

Australian banks have been under enormous scrutiny during the financial services royal commission, which reports on Friday. But one thing that hasn’t dominated the headlines is their relationships with their subsidiaries in New Zealand. Each of Australia’s big four banks owns one of the New Zealand big four. This has important practical implications, a fact acknowledged by New Zealand’s Financial Markets Authority and the Reserve Bank of New Zealand when they completed their own review into the conduct and culture of New Zealand’s banks in November.