Banks are increasingly threatening to withdraw services from companies such as miners, provoking fury from Resources Minister Shane Jones.
Banks in New Zealand are announcing they will no longer provide services to companies whose activities they oppose.
In its letter to the mining company—which doesn’t want to be named—the Bank of New Zealand (BNZ), owned by NAB, said it was making the decision in accordance with its coal mining policy.
This requires that the bank cap its exposure to coal since 2019, exit thermal coal mining by 2025, and metallurgical coal mining by 2030. Metallurgical coal, known as coking coal, is used to produce steel.
“These are parts of BNZ’s commitments to the Paris Agreement on climate change. The bank wants to support customers’ transition, and where transition is not possible provide advance notice of exit dates for banking services such that customers can seek alternate providers,” the letter said.
BNZ’s standard terms and conditions gave the bank the right to close customers’ accounts “for any reason.”
The announcement was also unsurprising, given that banks from around the world signed a pledge at the U.N. Climate Summit in Glasgow in 2021 to help drive emissions to net zero.
But the timing of the announcement is rather unfortunate for BNZ, with Prime Minister Chris Luxon having just said that acceptance of mining was crucial to increased prosperity in his 2025 State of the Nation speech and with Resources Minister Shane Jones known for saying, “Drill baby, drill.”
Cross-Party Opposition to the Bank’s Move
Jones said rural businesses and the oil, gas, and mining industries would “not be frog marched to the altar of climate cultism,” adding that banks had no right to withdraw services from clients who were engaging in lawful business.
Other MPs were quick to voice their opposition to the bank’s move.
ACT Party Rural Communities spokesman Mark Cameron said he suspected that “a cabal of woke banks is neglecting rural communities in the name of climate action. Banks are starving rural New Zealand of capital. Farmers have long complained they’re getting a raw deal on loans compared to their urban cousins,” he said.
She said it “would be very concerning for New Zealand as a whole if banks ganged together to stop giving finance to things that New Zealanders need. We still need petrol stations. If banks collectively chose not to bank petrol stations that would be a problem for every New Zealander.”
Some fuel stops have also been told they will be debanked.
She said the banks could explain to the committee “why they’re taking those positions.”
Debanking Becoming More Common
Known as “debanking,” the phenomenon of banks refusing services to companies with which they have a philosophical disagreement is becoming increasingly common.
New Zealand law firm Chapman Tripp estimated that in 2023, banks in the UK were closing over 1,000 accounts each business day—famously including that of Brexit proponent and Trump backer Nigel Farage.
Until now, though, most of the entities debanked in New Zealand have been international money transfer firms, though when the Gloriavale religious community had its accounts closed by the BNZ after an Employment Court ruling found that children as young as six were being forced to work in the community.
However, in that case, the High Court ordered that services be resumed because Gloriavale would otherwise be left without banking services (as no other bank was willing to provide services to them) and raised the issue of whether banking was an essential service with public interest obligations.
That question has remained open until now, perhaps because the targets of debunking decisions have been relatively uncontroversial.
The Parliament’s Finance and Expenditure Select Committee has recommended that the government ensure that organisations improperly debanked can access banking services, either through a government entity or their previous bank.