TUCKER I think it is about how much of our domestic pool of capital we are drawing into our capital market. One of the challenges we have, and need to work our way through, is the fact that there is a NZ$100 billion (US$62.4 billion) pool of KiwiSaver and we can’t say we are actually getting the most we could out of this money.

It is also about how the capital market is meeting the needs of the things it is funding, and the point here is that we are not getting a duration match. New Zealand has a challenge of building long-term resilient infrastructure and we don’t necessarily have a capital market that is providing access to matched funding for this purpose.

There are some positive signs. It has been great to see deeper pools of offshore participation in the government bond market, for instance – increased supply has been met by increased demand and a more diverse pool of investment. We’re hugely excited about new investors coming in right across the key regions of Europe, the Middle East, North America and Asia.

The big challenge is how we draw more foreign, long-duration money into this market – and not just the government bond market but also the capital market more generally – to fund long-dated infrastructure.

We should also try to understand the velocity of capital. Increasingly, banks are going to have to consider how we are using our balance sheets to generate more capital market activity, including churning our own capital faster.

FORD Looking at the same issue from a different perspective, what will help generate domestic and offshore capital flows, I believe, is getting economic growth going as we come out of the current cycle.

Having a longer-term pipeline of development across the country will bring in longer-term investment from offshore as well. We need the activity to attract capital into New Zealand and also to deploy capital within New Zealand. From there, we should get private capital coming in to mid-sized businesses and supporting economic growth there, too.

The thing we can work on is confidence in the market – that it will be possible to move in and out of the market. This is a good marker of success.

MCKINNON We need to think about the investor community as well as those that want to borrow. One of our challenges in New Zealand is the demographics of an ageing population, specifically how we are going to fund it and therefore how we maximise the return of retirement savings. There are multiple elements at play and we really have to make sure we’re considering all of them.

THOMSON It’s not just about the capital market. Investors need to have confidence in New Zealand Inc itself – of which capital markets is a part. But we can’t even sort out a bridge in Auckland. We need to build confidence that investors can come here and get their money back with good returns. This involves things like reducing the uncertainty that government policy is going to change at the next election.

MCKINNON As we have already discussed, these are all long-term assets and they need a long-term programme of work. Investors like some form of certainty about what the future looks like – this is what we need to attract foreign direct investment and other forms of capital coming into New Zealand. It also enables us to bring skill bases and capacity into New Zealand.

We have to have a better long-term plan and we have to work out the roles of government and others. Everyone in the room can play a role in this, to make sure we are supporting it. Investors will keep coming if they can see a pipeline, progress and that they will get returns.

TUCKER I agree that we have been lacking a long-term economic plan. The thing we should be most encouraged by in the last few months is that the new government is talking about long-term planning. However, for this to have any value it has to have genuine bipartisan support for at least the core element.

We talk about sovereign risk as the risk of default. But there is also sovereign risk in investing a country where the game changes every 6-9 years. We have to stop this cycle. It goes beyond infrastructure, too. Things like not having an oil refinery – this should be part of an economic blueprint. When we no longer have a refinery, a series of flags should go up that make us confront the challenge. We haven’t had this level of planning, and we need it.

FORD I think we’re all saying the same thing: we want that longer-term pipeline of activity across New Zealand to give confidence to all forms of capital. We have talked about this for years, and while it feels like the rhetoric is improving there is certainly plenty to be done.

The fact is that infrastructure is quite broken and something has to be done. Hopefully, this comes with the positive side-product of bipartisan and longer-term planning that can give certainty to offshore investors that there will be liquidity and activity here in the longer term.

THOMSON We need to support the market. It is up to us to make sure that things like repo, a potential futures market, and interest rate swap and cross-currency markets are all acting efficiently, and that there is liquidity to support the issuance of and investment in government bonds.

TUCKER We are all going to get structurally longer of this asset over coming years – but this is a good thing. Risk appetite is important but so is making sure we are all well plugged in to key liquidity centres offshore. The increase in offshore holdings has been quite impressive, as is the fact that a lot of this has come from solid real-money accounts, central banks and long-duration buyers that are attracted to this market.

They have reason to be: it is an attractive market. We have fiscal discipline, generally a good plan for where the country is going, and we are well-rated and English common law based. People want to invest here.

We need to build our own risk appetite based on increasing confidence of deeper liquidity pools offshore and how we can tap into them. We are all going to have to step up, to increase supply. But the demand is there – and we should be confident about it.

TUCKER We are a signatory to the Net Zero Banking Alliance. We have clear targets set for emissions reduction, particularly for our key sectors. The bulk of our financed emissions are in the agriculture book. We have clear reduction targets by 2030 for the dairy sector, sheep and beef.

How are we helping our customers in this sector? First, by recognising that they are not going to get there on day one, and it’s unfair to expect this to happen. Rather, we will take them on a journey.

Collectively, as an industry, we have standards around agriculture financing. Just more than 12 months ago, we launched a product to our customers using these standards as a two-year journey. The idea is that they do not need to meet them straight away but they will need to meet them over a two-year horizon.

We have set up an ESG [environmental, social and governance] advisory team that works with customers that are finding challenges through the transition. But there are multiple paths that can be taken. It would be easier to say we are not going to bank some entities – just to exit. But we believe this is not helping anyone, it is just pushing a problem to someone else.

Instead, we think about how we can work with clients to resolve the challenges they are facing. There is a very receptive audience. Companies want to work with us when we are prepared to work through transition with them.

MCKINNON We have an extensive transition programme in place. We also talk to a group of our customers to understand what their transition programmes look like, assess them and then work with them on delivery. As years go by, we grow the number of companies or customers in this group.

We have two types of targets. Some come out of being a subsidiary of ANZ Group, because the group has its own targets and we are sometimes captured under these. ANZ New Zealand is also setting some of its own targets: we are in the process of drafting our mandatory climate disclosure, which will incorporate our targets. The agriculture sector is certainly the largest one from a financed emissions perspective.

THOMSON We’re very similar. There were some statements, quite early, about being out of fossil fuels and the like. The pendulum has probably swung back to looking at the transition story, and we need to be realistic about this, including supporting our customer base.

For example, CBA [Commonwealth Bank of Australia] has been very focused on carbon trading, helping clients with it as well as financing opportunities. We are exploring nontraditional credit metrics for assessing some of the new technologies, which is also vital.

It is a big challenge for the banks to understand new industries that are going to help us in the transition. There is no history of this. Our credit teams are very good if they are working with good precedent and strong markers but it is much harder to assess something completely new. We are trying to push on, for instance exploring mezzanine types of financing and the like.

FORD We have targets, too – and I would add that the whole market and industry has moved a long way in the last couple of years. It has gone from a point where we were all building capability within our teams and having a new conversation with customers to something that is embedded throughout our customers’ boards and where they all have their own targets and ambitions.

The conversation has changed, and everyone’s swimming in the same stream. It has actually been something of a reality check over the past 2-3 years. Very quickly, the economy teaches us a lot about how the transition might actually occur. It is going to ebb and flow socially as well.

It doesn’t have to mean negative impacts on the way New Zealanders live; we can transition in a way that doesn’t play out poorly from a social perspective. We are learning a lot as we go, but the great thing is that there has been an immense amount of growth in capability across the board in New Zealand – it is definitely heading in the right direction. All industries, whether or not they have set targets, have sustainability ambitions now.

MCKINNON The last 12-18 months have been reasonably tough for most sectors in New Zealand, with lower investment and activity. This is demonstrated in debt capital market statistics and elsewhere.

But you’re right – it is amazing how in the last couple of weeks economic reports are starting to show that people are a bit more optimistic. We are also witnessing companies just starting to have a more positive outlook – which is helpful.

There is still a little way to go and there is a fair amount of pain out there. But we have started the process. If our large and small businesses start investing, which they have probably delayed for a while, it will be really helpful.

FORD The [August] rate cut felt like a bit of a relief. Before it, companies were thinking about how long peak rates could go on for and whether conditions were potentially going to get harder.

I think there has been a sigh of relief on the basis that companies now likely feel they can get through the next six months, which is the amount of time it will take some of them to get back on top of their cash flows. The cut has given them the relief they needed.

They can also now begin thinking about where they will start to take their businesses after this period. From travelling around the country, I definitely get the sense that there has been a pickup in optimism. I don’t expect it will bounce back straight away as we still have a bit to work through. But it is good that businesses are starting to think about the next, positive, chapter.

THOMSON There is always going to be a little bounce in confidence after rate cuts. In the short term this will be great. But I am also thinking about regional and geopolitical impacts on New Zealand. When do clients start thinking about what will happen in the US election and how this feeds through to investment, for instance?

I agree that optimism has picked up and we are also predicting 2025 to be okay and 2026 to be quite strong, based on low rates. But how do we fit in with the region and what is happening there? There are still supply chain issues and there is a strong argument that these could get worse in the South China Sea.

FORD Where we have most optimism is if the government kicks off some infrastructure projects. We know this would bring forward economic growth in a way that flows right through to workers and stimulates all parts of the economy to get moving again. While I take the point about geopolitics, this is something that can get domestic growth going – and it would be really positive.

TUCKER A lot of sectors in the economy are doing it really tough. Sheep and beef is not easy at the moment, and businesses that were hit by the floods last year are still on the road back.

But behind this, there is a growing sense of optimism – and one that debt capital markets can support. If we are more optimistic about the opportunities we are seeking, our customers will be more optimistic about the future and about investment opportunities. We are getting a plan from the government, which should bring a degree of certainty and a level of confidence for investment.

The big thing I believe we should focus on is an issue we have not spent much time talking about for decades: how do we increase productivity? Businesses need productivity gains to be confident in investing. This could come through addressing big generational issues such as infrastructure and housing. If we solve these issues, or at least begin the journey to solving them, we should have a lot of confidence.

MCKINNON Within our productivity, our investment in R&D is incredibly low. This is something the country has to lean into if we are going to become more efficient, use our capital wisely and deliver returns. It is something that should be discussed more than it is, and we should be thinking about investing in it more.

FORD We like people to go offshore and have these experiences, and we love getting them back as well. They come back with great capability. We have to give them something to come back for, though – and this would be the vibrant markets we have been talking about.

People want interesting jobs. They want to be doing transactions and to be helping customers grow. What we have to do is ensure we are building interesting markets and supporting customers in New Zealand so people want to come back or indeed want to stay.

MCKINNON We have quite a good intern programme but we accept that young people will go and do their OE [overseas experience]. We lose some to OE, but some go offshore to the ANZ network globally – which is helpful. The idea is to give them a really good experience for the bank and the sector. This is a really important obligation that we take seriously: to give the younger generation this opportunity.

When they go, it is wonderful for them to come back. It works quite well in that we are able to get these people to come back to the bank once they return to New Zealand. We have a good track record of this – then we train them up and we let them go again.

THOMSON I accept that people have to leave. They get a great range of experience offshore, in a variety of markets. We probably need to be more open about bringing people back if they’re good. We don’t need a specific seat for them: with good people we should trust them, let them come in and we will then think about what they can do.

It is a bit like taking an entrepreneurial attitude, as opposed to just trying to fill a particular vacancy. We have trained them so we know they’re great – all that has happened is they have left and gained more diversity. There shouldn’t be any reason not to want to bring them back on board.

TUCKER Everyone is worried about losing young talent but we have to be realistic about it. There is a lot of pent-up demand and people are moving after a relatively constrained period.

We also have to understand the demographics and motivations of this generation – it is different! In my 20s, I was concerned about what I was getting paid. This generation is completely different – they need to feel a connection to purpose. It cannot just be a job where they clock in and clock out. It must be something bigger.

Consequently, we all need to think about how we’re providing a reason for being in the job. In the last decade, parts of the banking sector have become unattractive. For instance, my eldest said to me he was thinking about moving to the buy side. He joined a private equity firm in Australia and told me: “The things you loved about banking in your 20s, I’m witnessing more in the asset management industry.”

It is hard to debate his point. Therefore, the challenge for us is to think about how we can make banking more creative and exciting, and less constrained, so we can start attracting people to banking. Banking is a creative industry that should be exciting. We should also be thinking about how we cycle talent back into New Zealand.

THOMSON I went to a forum where there were 13 speakers ranging from national security, global supply chains and shipping. Out of the 13 speakers, 11 spoke about AI and what is going to happen with it.

There is optimism that it is going to be a good thing and that we will not be overtaken by it. But there is clearly concern, too. This is a world in which three words and a picture is enough to create a video of someone presenting a speech. The technology is incredible but there is no regulation at the moment. We need to think about an appropriate balance.

FORD AI will be a game changer. We talk a lot about how AI will make things simpler for us all, and we are already using it to a degree.

What we’re witnessing with cybersecurity is interesting. I would also add APIs to the list. Specifically, how this space will open up and simplify things going forward.

MCKINNON Technology has changed in the last five years and it is going to keep changing in the next five. AI is discussed everywhere. We have to be cautious but it is going to have significant benefits to productivity and elsewhere.

TUCKER A lot of bankers are panicking about AI replacing them. But we were having these conversations a decade ago and we are still here.

My perspective is that, in 10 years’ time, if we compare two bankers, one of whom is armed with deep capacity to use AI tools, this one will have a clear advantage. A good banker will anticipate this outcome. Tools are developing that are enabling us to anticipate needs that even our customers do not know they have.