Community Trusts History
The early days
The early trustee savings banks originated in Scotland in 1810, enabling anyone – not just the rich – to open a bank account and save. The deposits were owned by the depositors as a co-operative, with any surplus funds used for long-term savings schemes and community charitable projects. New Zealand’s first trustee savings bank opened in Wellington in 1846, followed by another a year later in Auckland.
Over the next 150 years, more trustee banks were established across New Zealand, and they were highly regulated – the banks were only permitted to operate within defined regional boundaries, and they had to provide services to everyone within those boundaries who wanted them. The banks’ profits could only be given to specific Government-approved institutions, like hospitals, libraries and museums or particular social service providers.
Government deregulation
In 1988, the New Zealand Government deregulated the banking industry, opening the way for the regional Trust Banks to compete with bigger trading banks and enable international investment. The Government established 12 independent Community Trusts throughout New Zealand, and ownership of the 12 banks was given to the communities, each with 100 per cent ownership of the shareholding in their regional trustee savings bank.
The specified area of operations of each of the 12 Trusts mirrors the area serviced by their regional savings bank, covering the whole of New Zealand. Several of the regional banks amalgamated, resulting in the establishment of Trust Bank New Zealand Ltd. By April 1996, most of the community trusts sold their respective bank shareholdings to Westpac Banking Corporation. This allowed the asset base of investment for each of these community trusts to grow and enabled grants to be returned to the community on a regular basis from the returns on those investments.
Governance and operations
The Trusts operate under the legislative framework provided by the Community Trusts Act 1999 and Trust Deeds which are largely consistent across the 12 Community Trusts.
Their primary purpose is to provide charitable, cultural, philanthropic, recreational, and other benefits to their communities.
Established in perpetuity, the Trusts set their investment objectives and structure their investment portfolios to not only meet the needs of their communities today, but also to ensure support for future generations.
Each Trust is governed by a Board of Trustees appointed by the Minister of Finance.