Finance Minister Bill English has defended banks in the face of criticism from a National backbench MP, John Hayes.
Mr Hayes accused the banks of gouging farmers in his Wairarapa electorate by charging excessive interest rates on their overdrafts.
But Mr English told Parliament's Finance and Expenditure Select Committee the Government believed the banking system was competitive.
He said if there was one thing worse than profitable banks, it was unprofitable banks.
Mr English said countries in Europe had learned the hard way what happened when banks fell over.