I recently discussed the creation of Kiwi Bank, a National Bank In New Zealand with one of its architects Hon Matt Robson. Kiwibank was set up 20 years ago at the behest of the late left-wing politician Jim Anderton, who believed the country should have its own national bank.
It now has more than a million customers but remains a minnow compared to its big four Australian rivals, ASB, BNZ, ANZ and Westpac. Home loans are Kiwibank’s biggest business where it has a market share of 6.5% to 7%. It doesn’t have the skill or capacity to handle accounts for larger businesses, the Government or the agri sector. It has a 2% to 4% share of the business market, which is mostly home loans secured against a business owner’s residence. Kiwibank recently posted a record profit, but it was still less than one tenth of the ASB profit posted just a few days earlier.
Now its just been announced By The Minister of Finance Grant Robertson, that the Government is borrowing $2.1 billion to buy Kiwibank’s parent company to keep the bank in Kiwi ownership after two of its existing Crown-owned shareholders wanted out. The Crown will take over Kiwi Group Holdings, which owns Kiwibank and NZ Home Loans, under an agreement which allowed the shareholders to sell their shares to each other or the Crown from October 31 last year. ACC, which owned 25%, and NZ Post, which owned 53%, wanted to exit their investments.
The NZ Super Fund, which owned the remaining 22%, was interested in buying some or all of NZ Post’s stake but wanted the flexibility to bring in private capital and have the option to sell to private investors in the future, which the Government rejected as it wanted to ensure Kiwi ownership. T
he Government said it did so to make sure Kiwibank remains fully New Zealand owned. The move thwarts any attempt by the NZ Super Fund to acquire all of the bank and then restructure it.
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