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4 reasons why selling part of Kiwibank could do more harm than good

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To sell or to not sell – that’s the query that various governments have asked themselves since Kiwibank was established in 2002. Now it’s the turn of the present coalition led by the National Party. investigate the state ownership of the bank.

The ministers have asked the Kiwibank board exploring expansion opportunities for the bank, potentially including investment from private sector or government entities.

This got here just two years into the previous Labour government. 2.1 billion NZ dollars spent ensuring full control over Kiwibank and is part of the coalition’s efforts to extend public sector productivity, growth and efficiency.

The latest try and help the bank grow while retaining full New Zealand ownership must even be seen within the context of the recent Commerce Committee meeting draft report on banking services, wherein Kiwibank was identified as a market distorter.

If properly capitalized, the report says, Kiwibank should make New Zealand banking more competitive. Supporters (*4*)partial privatization or a public listing of some Kiwibank shares agree. They also argue that this is able to strengthen the stock market and funnel profits back to New Zealanders.

The government has not yet proposed anything specific. But any plans to partially privatise Kiwibank so soon after the state effectively rescued it deserve serious scrutiny. Such a move could do more harm than good, for 4 predominant reasons.

1. Bank concentration is normal

The traditional concentration of the banking sector in New Zealand and the dominance of the market by the 4 large banks headquartered in Australia are unlikely to vary any time soon.

But a concentrated banking sector is just not bad and even abnormal and exists in lots of countries. For example, three banks within the Netherlands currently they hold 84% of total banking assetsThe smallest, ABN AMRO, is larger than all New Zealand banks combined.

Still, the Dutch are less vocal in regards to the lack of competition and the high profit margins that include it. There is an acceptance, especially amongst EU banking regulators, that the choice of more small banks is just not a panacea.

Small banks in EU countries akin to Spain and the Netherlands have failed more often than large ones. What’s more, innovations in banking and finance come mainly from large banks.

Relative scale: The smallest of the three largest banks within the Netherlands, ABN AMRO, is larger than all of the banks in New Zealand combined.
Getty photos

2. Capital Investment and Growth

The notion that more capital will promote growth puts the cart before the horse. As fans of Shark Tank or Dragons’ Den investment shows know, only firms with a compelling value proposition attract funding.

Kiwibank’s track record leaves much to be desired. For example, the press release accompanying its 2023 results cited the launch of Apple Pay as a significant highlight. Other banks began offering the service in 2016.

Moreover, at 7.5%, the bank’s return on equity is the bottom among the many six largest banks. And its core capital ratio has not increased since 2018, making it harder to fulfill the Reserve Bank’s rising capital requirements.

Following a small capital injection of $225 million last yr, Kiwibank CEO Steve Jurkovich said the bank’s loan portfolio could increase significantly. According to the Reserve Bank financial strength panelHowever, Kiwibank’s net loans and advances grew by 2.7% and 1.8% within the quarters ending December 2023 and March 2024, respectively.

This was not significantly different from growth in previous quarters since 2018, which averaged 2.3%. In other words, Kiwibank’s own experience shows the issues within the equity-before-growth narrative.

3. Concealed foreign possession

In a really perfect world – with a deep and liquid capital market and a big, growing and productive economy – having a competitive bank that’s 100% owned by New Zealand residents might work well.

In reality, New Zealand doesn’t have these features. In fact, Kiwibank’s ownership restrictions – which prevent it from being floated or sold directly – have resulted within the previous owners transferring their shares to the federal government.

Partial privatization would due to this fact require selling shares at a big discount. And as sale of Kiwi Wealth to Fisher Funds in 2022 suggests that it could ultimately be financed by foreign private capital.

This could be achieved through a leveraged buyout, where an overseas private equity firm lends large sums of money to, for instance, a KiwiSaver fund to purchase shares. Technically, the KiwiSaver fund could be a 100% New Zealand company that owns shares in Kiwibank. However, this ownership could be largely formal.

The New Zealand owner would pay a high rate of interest to the private equity firm. And it is probably going that the private equity firm would wish to break up Kiwibank to scale back costs and improve efficiency.

By comparison, the present setup – 4 dominant banks owned by parent banks in a geographically and culturally close country – is just not that bad.

4. Unintended consequences

Finally, there may be the problem of popularity and moral hazard. Investors could be skeptical if Kiwibank were partially privatized, as history shows that its ownership appears to be depending on the present government.

Given the uncertainty, investors may buy stocks which might be trading at a deep discount or if the stock offers a high yield – which is strictly what private equity firms require.

In turn, that could lead the bank to tackle an excessive amount of risk, which creates disruption that nobody wants. Buyers might also desire a guarantee that they’ll return the shares to the federal government if the bank doesn’t do well.

Rather than rush into partial privatisation, Kiwibank should deal with strengthening its capital base, improving its performance and establishing a transparent track record of growth and innovation.

Only then should any change of ownership be considered. The path to a more competitive banking sector in New Zealand requires patience, strategic planning and a sensible assessment of market conditions, not hasty structural changes.

This article was originally published on : theconversation.com
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Business and Finance

Black Men Buy Homes aims to increase black home ownership

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Black Men Buy homes, Atlanta


Kevan and Ayesha Shelton took off Black men are buying houses to help reduce the black home ownership gap between men and girls.

The growth rate of Black women homebuyers has reached 7.3% since 2017. Growth from 2018 to 2020 exceeded doubled rate of three.4% amongst black men, BLACK ENTERPRISES reported.

The Sheltons are concerned concerning the gap between men and girls. This is a way for them to start buying homes for black men provide information directly to Black men. According to Shelton, the ignorance creates significant barriers for black men Atlanti.

“Black men often face challenges when purchasing homes due to limited information about the process and financial resources, which can hamper their ability to secure funds for down payments, credit and closing costs. The goal of our initiative is to break down these barriers so that more Black men can achieve the dream of home ownership,” the Sheltons said.

On October 12, the Sheltons hosted the inauguration Black men are buying houses event in Atlanta. The event was held in cooperation with the Memorandum of Understanding (MOU) and Operation HOPE. Operation HOPE founder John Hope Bryant was available to impart knowledge on the importance of Black financial literacy and wealth.

While Black women are outpacing men in homeownership, additionally they face barriers. TO BE reported on the barriers women encounter of their pursuit of ownership. Debt, access to mortgages, student loans and low wages are cited. It appears that Black women have access to the precise home buying resources and tools, but they lack the power to use these tools to their advantage.

“…If you are a black woman in America, you will likely have difficulty purchasing a home in many circumstances,” said Jacob Channel, an economist at LendingTree. Channel pointed to “social obstacles that… shouldn’t exist” that make things “unnecessarily difficult” despite the growing variety of black women who own homes.

Black women don’t face these obstacles alone. As organizations, e.g Black men are buying houses, help close the gap between Black men and Black women, the complete community will need to consider how to overcome structural biases and inequalities.


This article was originally published on : www.blackenterprise.com
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Business and Finance

Crypto surges after Trump’s election – but is it a good ethical investment?

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Estimated 18 million Americans are invested cryptocurrency– says the Federal Reserve. And the United States has just chosen pro-crypto-president.

Cryptocurrencies like Bitcoin have change into trendy digital resource. Supporters say crypto undermines capitalism because it bypasses traditional bankers. Crypto perhaps offer quick riches together with an environment of high-tech sophistication.

Early adopters reaped enormous advantages, and plenty of of them became millionaires and billionaires.

Currently, there are approx 100,000 cryptocurrency millionaires. Moreover, cryptocurrency wealth has been built Fairshake, the most important political lobbying group within the US During the last election, it helped elect 253 pro-crypto candidates.

But is cryptocurrency a good ethical investment?

as business professor who studies the technology and its implications, I even have identified three ethical harms related to cryptocurrency which will give investors pause.

Three wrongs

The first harm is excessive energy consumptionparticularly Bitcoin, the primary decentralized cryptocurrency.

Bitcoins are created or “mined” by tens of hundreds of computers in huge data centers, which contributes significantly to carbon emissions and environmental degradation. Bitcoin mining, which accounts for the lion’s share of cryptocurrency’s energy consumption, uses as much as 0.9% of worldwide electricity demand – near Australia’s annual energy demand.

Secondly, unregulated and anonymous cryptocurrencies are the payment system of alternative for criminals fraud, tax evasion, human trafficking AND ransomware – the latter cost victims an estimated $1 billion in fraudulent cryptocurrency payments.

Until about a decade ago, these bad actors generally moved and laundered money through money and shell corporations. However, around 2015, many individuals switched to cryptocurrency, which is a much less cumbersome type of service dirty money anonymously.

The bank cannot store or transfer money anonymously. By law it is a bank passively complicit in money laundering if not enforced get to know your customer measures to curb bad actors resembling money launderers.

However, within the case of cryptocurrency, legal and ethical responsibility can’t be transferred to the bank – the bank doesn’t exist. So who is complicit? Any member of the cryptocurrency ecosystem will be seen as ethically complicit in enabling illegal activities.

Enegix employees work at a data center in Ekibastus, Kazakhstan, certainly one of the world’s largest Bitcoin mines, January 3, 2023.
Meiramgul Kussainova/Anadolu Agency via Getty Images

I find these first two harms to be probably the most ethically troubling. The first harms the Earth, the second undermines global systems of trust – the interplay of institutions that underpin economic activity and social order.

The third problem of cryptocurrency is its predatory culture.

A predatory system, especially without regulatory oversight, exploits small investors. And some cryptocurrencies have enriched their founders by reaping the advantages lack of investor knowledge about virtual currency.

Some cryptocurrencies, especially smaller coins and initial coin offerings, do Characteristics of Ponzi schemes.

For example, the now defunct Bitconnect promised investors big profits who exchanged their Bitcoins for Bitconnect tokens. New investors’ money paid out “profits” to the primary layer of investors with later investors’ money.

Ultimately, Satish Kumbhani, founding father of Bitconnect, decided to achieve this indicted by a federal grand juryand from 2024 his whereabouts are unknown.

A pernicious myth

In addition to the ethical harms of cryptocurrency, there is a pernicious myth surrounding digital coin. The myth of inclusion is the idea that cryptocurrency has the facility to profit especially socially disadvantaged people without a checking account.

The world’s poor who wouldn’t have bank accounts and who could use cryptocurrency for international money transfers to family back home don’t necessarily enjoy the advantages of cryptocurrencies. It’s for this reason need pay conversion and transfer feessay, dollars to cryptocurrency, after which from cryptocurrency to the local currency of the person receiving the cash transfer.

In fact, the distribution of crypto assets is largely concentrated among the many wealthy. A 2021 study found that simply 0.01% of Bitcoin owners controls 27% of its value.

The democratization of finance is often presented as a move geared toward breaking the dominance of traditional financial institutions – private banks and government central banks. However, this narrative didn’t prove true.

Instead, a latest elite emerged: cryptocurrency creatorsearly supporters of i conservatorswho modify the cryptocurrency’s software code and influence its future direction. This group exercises disproportionate control, including over cryptocurrency management. All of this reflects the concentration of power that cryptocurrency was intended to dismantle.

Just a little more ethical?

To be fair, the cryptocurrency community has not ignored the criticism, including calls for greater environmental awareness.

In early 2021, community members founded Cryptocurrency Agreement. The group has recruited around 250 crypto corporations to cut back environmental damage.

The following 12 months, Ethereum took its most important step with its Ether coin. It has reduced its size energy consumption by over 99% by migrating to a coin mining mechanism called “proof of stake”, which doesn’t require miners to unravel complex, energy-intensive puzzles to validate transactions.

It was a daring move. However, Bitcoin, the most important cryptocurrency, has not followed in Ethereum’s footsteps. Bitcoin stands out in that its energy consumption exceeds that of another cryptocurrency.

A worker stands between two rows of bitcoin mining machines along a wall.
A employee installs a latest row of bitcoin mining machines on the Whinstone US bitcoin mining facility in Rockdale, Texas, October 9, 2021.
Mark Felix/AFP/AFP via Getty Images

To address other harms of cryptocurrency, some Regulatory authorities began to regulate the cryptocurrency market in 2023, the European Union, the United Kingdom and the United States have launched efforts to curb criminality and protect investors.

In January 2024, US regulators listed funds allowedthat are popular investment funds for investing in cryptocurrencies. The move was intended to assist small investors trade in a safer market.

However, normalizing cryptocurrency trading could have perverse ethical consequences.

For example, probably the most successful ‘ethical’ fund in 2023, Nikko Ark Positive Change Innovation Fundwas successful with a 68% return because he bet on cryptocurrencies. Its manager rationalized this investment by repeating the parable that cryptocurrency allows “providing financial services to underbanked people

Where does all this leave the ethical investor?

I consider that investors have two clear ethical options regarding cryptocurrencies: they will abandon Bitcoin or no less than put money into other cryptocurrencies that minimize harm, especially environmental harm.

However, even so-called ethical investments raise hidden ethical issues.

Many ethical investors put money into the so-called ESG funds that emphasize social or environmental impact. Some of those ESG funds may avoid holdings in oil corporations by investing directly or not directly in cryptocurrencies.

This doesn’t seem ethically coherent.

While cryptocurrency offers exciting opportunities and the potential for prime returns, its environmental impact, links to criminality and predatory nature pose significant ethical challenges.

This article was originally published on : theconversation.com
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Business and Finance

Daymond John celebrates the fifth annual Black Entrepreneurs Day

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shark tank, Black Entrepreneurs Day, Daymond, John, deal, stalker, grants, Black entrepreneurs


Daymond John will have a good time the fifth anniversary of Black Entrepreneurs Day in Atlanta for the first time.

November 22, John’s signature Black Entrepreneur Day (BED) will take over Atlanta’s historic Fox Theater to have a good time Black Excellence and Opportunity. This 12 months’s event is free for all to attend and includes brand activations that enable participants to reinforce their business and brand for the foreseeable future.

From insightful discussions with inspiring guests to the NAACP Small Business Powershift Grant Program, which can award over $1 million in grants to over 40 Black-owned businesses, Black Entrepreneurs Day offers the whole lot a Black business owner needs to raise take your corporation to the next level the next level. This 12 months’s event is special for John; In addition to hosting BED in Atlanta for the first time, the event shall be streamed live for all to enjoy.

“We’re doing it live this year and we’re always trying to improve what we have,” John says BLACK ENTERPRISES.

“I think we added another element to it called ‘Entrepreneur Square,’ where if you want to come early, you can come in and a company like Constant Contact takes photos. Hilton for Business, Chase, Chase Wealth Management is there, US Navy. You add a lot of different things to it.”

It shall be a star-studded event featuring Grammy-winning artist and philanthropist Kelly Rowland, iconic artist Flavor Flav, influential media personality Charlamagne tha God, Olympic gymnast Jordan Chiles (presented by JP Morgan Wealth Management), financial educators Rashad Bilal and Troy Millings with “Earn Your Leisure” and a live performance by multi-platinum Atlanta rapper 2Chainz presented by Raising Cane’s.

Through the NAACP small business Powershift grant program, entrepreneurs can do exactly that use to the Powershift Grant program and grow to be one in every of 40 firms awarded a share of grants value over $1 million. This 12 months, partners including JPMorgan Chase, Hilton, T-Mobile for Business and Constant Contact will contribute a complete of $100,000 in grants, with each grant valued at $25,000.

“We are very passionate about what we do,” John says of the Black community. “I think we can now gain more power by democratizing the retail space with solutions like artificial intelligence and social media. Let’s support each other and support each other.”

Given the strong sponsorship support for BED 2024, John sees it as clear evidence that giant corporations recognize the value of investing in the Black community, even in the face of opposition from anti-DEI efforts.

“There are many other cultures that love to support us as well. They love our music, they love our food, they love everything about us and they just want to know how they can support us,” notes John.

“I think if we look at it this way, it means we can never gain or thrive on our shortcomings, but we can always find those gems and ways to grow from what we are. We are a resilient nation loved by all.”

Launched in 2020 to handle the challenges facing the community in the wake of the events surrounding George Floyd, Black Entrepreneurs Day was established to shift the focus from hardship to empowerment. Designed to uplift Black entrepreneurs, the event goals to teach and encourage through conversations with iconic Black leaders and celebrity guests, features celebrity musical performances and offers key financial support through the NAACP Powershift Grant program.

Tickets for Black Entrepreneurs Day 2024 are free and may be purchased at: BlackEntrepreneursDay.com Now. Press play to learn more about this 12 months’s event.


This article was originally published on : www.blackenterprise.com
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