(Bloomberg) -- The Bank of New Zealand has started to limit lending to gasoline outlets, saying the outlook for those businesses is becoming clouded as more drivers shift to electric vehicles.
The BNZ won’t extend new lending to fuel retailers and is asking existing customers to amortize their loans, Chief Executive Dan Huggins told a parliamentary select committee Wednesday in Wellington.
“We are asking that those loans come off over time as we think that’s sensible from a credit perspective,” he said. “And we’re not looking to increase our exposure to that sector.”
Huggins was quizzed by the committee, which is conducting an inquiry into banking competition, following claims from the farmer lobby group Federated Farmers that banks intend to “defund” gasoline retailers as part of their commitment to the Net-Zero Banking Alliance.
Federated Farmers alleges that the alliance — a global group of lenders seeking to align lending and other practices with achieving net-zero greenhouse gas emissions — is effectively a cartel.
Government backbencher Ryan Hamilton asked Huggins what he would say to mom and dad investors who have put their life savings into owning and operating a fuel retailer, suggesting the BNZ and its “cartel buddies” intend to shut down the industry.
Huggins said there was no intention to do that, but the bank had to take the long-term outlook for such businesses into account.
“We’ve looked at our exposure to petrol stations and then we look at the long-term future of those businesses, recognizing that we would expect that we’re going to see conversion to electric vehicles and demand change for fuel services,” he said. “Therefore, from a credit perspective, we’ve said ‘look we think we’ve got enough exposure in that space and don’t want to increase that exposure’.”
The BNZ is working with fuel outlets who plan to convert to service electric vehicles, he added.
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