CORRECT: Westpac keeps core government transactions contract, other banks get peripheral services
(Fixes govt savings in 4th graph)
By Paul McBeth
Oct. 5 (BusinessDesk) - The local arm of Westpac Banking Corp has kept its contract with the New Zealand government to
provide core transactions, but will have to share peripheral services with its rivals.
Finance Minister Bill English and Economic Development Minister Steven Joyce today announced Westpac was the winning
bidder for the core contract, which accounts for $229 billion worth of credit and $219 billion of debit transactions
each year. Westpac will continue to provide core transactional services, foreign exchange transactions, payment services
and card services.
Other successful bids will see foreign exchange transactions provided by ANZ Bank New Zealand, ASB Bank, Bank of New
Zealand and Citibank, payment services offered by ANZ, ASB, BNZ, and Kiwibank, and card services from ASB, BNZ, and
Citibank, the ministers said in a joint statement.
Lower fees were negotiated and the all-of-government deal is expected to save about $120 million over the term of the
contracts. Westpac's core contract will run for another eight years, while the foreign exchange transactions, payments
services, and card services are all three-year deals with two rights of renewal for a further three and two years
respectively.
"The new contracts will deliver cost savings for government agencies and all New Zealanders," English said. "They will
ensure that banking services are fit for purpose and provide value for money."
The deal is in line with the Ministry of Business, Innovation and Employment's preferred option in a discussion paper
preceding the tender for core transactional banking services currently under the master contract to be ring-fenced,
along with up to seven other sub-categories, including school banking, trust accounts, international payments and
credit/purchasing cards.
Government agencies have 93 Crown accounts, 78 departmental accounts and 175 trust accounts. The Treasury processes the
biggest volume, with $245 billion of cash in and out each year. On a merchant services level, the public sector operates
170 merchant services with $718 million worth of transactions. The state has 7,811 cards on issue across the sector.
English first flagged plans to open up banking services to tender in 2010, amid a push by Joyce to seek
all-of-government contracts for everything from legal services to advertising, travel costs, office consumables,
computers and vehicles in an effort to wring out cost savings and urging from the Green Party, which felt Westpac had
held the contract uncontested for too long.
The winning bidders committed to establishing a $10 million innovation fund to improve banking systems for the wider
public benefit.
Westpac New Zealand chief executive David McLean said the government spelled out its digital aspirations, something he
said his bank believes it can meet.
(BusinessDesk)