MPs slam banks over interest rates

The Finance and Expenditure Committee report raised concerns about the banking sector's response to the recession, finding the Reserve Bank's series of cuts to the OCR had not been passed on in their entirety by New Zealand's banks, while banks' profit margins had declined marginally in the past year, due mainly to provisioning against future credit losses.

The banks' refusal to pass on cuts to the OCR might be undermining the central bank's efforts to tighten monetary policy, the report said.

"The report reflects strong and growing concerns across Parliament that banks have no t fully passed on interest rate cuts and may not be appropriately sharing the burden of the recession," said Labour Party finance spokesman David Cunliffe in a statement. "Today's report is a strong bipartisan statement of concern that the banking sector would do well to heed."