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Graphic: An Encyclopaedia of New Zealand 1966.


This information was published in 1966 in An Encyclopaedia of New Zealand, edited by A. H. McLintock. It has not been corrected and will not be updated.

Up-to-date information can be found elsewhere in Te Ara.



Savings Banks

Savings banks in New Zealand comprise the trustee savings banks, the Post Office Savings Bank, and the trading banks' savings banks. No statistics for these last are yet available, but as the following figures show, the Post Office Savings Bank is much larger than the combined trustee savings banks as the following figures illustrate:

At 31 March 1963 P.O.S.B. Trustee Banks
Number of depositors 1,971,000 523,000
Amount of deposits £338.6 million £92.0 million

The Post Office Savings Bank commenced business in February 1867 and, as the figure for the number of depositors' accounts clearly shows, is a major institution in New Zealand and one with which virtually everybody is familiar. There are over 1,000 branches of the Bank throughout New Zealand, and a range of services is available to depositors. To meet the varying requirements of the community the Bank provides various types of account–Ordinary Post Office Savings Bank; Thrift Club; Home Lay-by; Investment; National Savings; and School Savings Bank. Although conditions governing deposits to these accounts vary, essentially they are accounts for the small saver. For most of these, any amount in excess of 1s. may be deposited and withdrawals made on demand. Interest is paid annually by crediting accounts.

Besides providing a ready facility for people to save by operating a savings account, the Bank is of prime importance to the Government as a source of funds and, to the economy generally, as the channel for a large proportion of private savings. The Bank's funds are invested in Government securities. To the extent that the community saves instead of spending, the Government is able to finance its capital programme without resort to methods that could have an inflationary impact if its expenditure were not to be reduced or financed to a greater extent from taxation. Accordingly, the Bank plays a major role by providing savings facilities which, in the view of many economists, are just as important, if not more so, in promoting thrift as those other factors such as the rate of interest and the level of private income.

The trustee savings banks also occupy a prominent place in this country's finances. They are, however, limited to a certain extent by legislative provisions. Because repayment of their deposits is guaranteed by the State, some of these limitations are readily explainable. Others are not, however, and the explanation seems to lie in a conviction that the trustee banks compete with the Post Office Savings Bank and do not, by their existence, necessarily mean a higher net level of personal savings. The Trustee Savings Bank Act of 1948 laid down that a bank must not establish a branch or agency more than 25 miles from its head office. When, however, the trading banks were given authority in 1964 to open savings branches, this 25-mile limit was removed and replaced by a system of zoning based on 16 defined natural regions with a community of interest, each zone covering the area in which a particular savings bank was permitted to open branches. Another limitation on their activities is the requirement that not less than 50 per cent of their investments must be held in the form of Government securities. The banks are required to keep as cash in hand or on current account at least 5 per cent of their depositors' balances. Funds not held in these ways are invested by the banks in mortgages. The maximum rates of interest they may pay to depositors is fixed by Government; consequently, to attract customers, they are forced to rely substantially on the provision of a first-class service. Judging by the steady increase in the number of depositors over the last decade, the banks are playing a significant role in meeting local needs. By far the biggest trustee bank is in Auckland, partly of course due to the large population it serves. The next biggest is in Invercargill.

The Private Savings Bank Act of 1964 gave legislative authority for the trading banks to establish and carry on private savings banks by means of savings banks companies under the control of the trading banks. Activities of these savings banks are restricted under the provisions of the Act or of regulations: the upper limit on deposits on which interest may be paid is £2,000 (the same as for the trustee savings banks); interest rates paid are prescribed by Order in Council; they may not open branches in certain areas until existing specified trustee savings banks have been in operation for three years; the investment of funds is controlled; capital expenditure is regulated; and the hours of business and holidays are prescribed. It has been announced that Government stock in which these savings banks are required to invest will bear the same rate of interest as those issued to the Post Office Savings Bank–this is a lower rate than that of the trustee savings banks. These new savings banks will, with the Post Office Savings Bank and trustee savings banks, provide a comprehensive network of savings facilities which should result in a worthwhile addition to the volume of savings available to assist higher rates of economic growth.

by Robert John Familton, M.COM., Economist, Reserve Bank, Wellington.

  • Report of the Royal Commission on Monetary, Banking and Credit Systems, 1956 (A to J. 1956, B. 3)
  • Monthly Bulletins, Reserve Bank of New Zealand
  • Banking in the British Commonwealth, (ed.) Sayers, R. S. (1952)
  • Open Account, Sinclair
  • K., and Mandle, W. F. (1961);New Zealand
  • Banker's Hundred, Chappell, N. M. (1961)
  • Australia and New Zealand Bank, Butlin, S. J. (1961)
  • Banking Law and Practice in New Zealand, Bright, T. N. (1962)
  • Money and Banking in New Zealand, Reserve Bank of New Zealand (1963).