Finance Minister Nicola Willis says she wants to look for external investors that could give Kiwibank enough capital to take on the big Australian banks.
In a speech at the National Party conference on Saturday, the deputy party leader said she wanted the state-owned bank to grow into a disruptive competitor.
“It can’t do that without extra capital. And I am interested in exploring where that capital might come from,” Willis said.
There were lots of Kiwisaver funds, general investment funds, and individual New Zealanders looking for local places to invest their money and support the country's future.
“So, let’s have a look at what’s possible. It’s time to explore all the options”.
This is the clearest indication yet that the Coalition Government might consider partially privatizing Kiwibank, either through a stock exchange listing or by bringing in an investor.
It follows the Commerce Commission’s recommendation to inject more capital into the bank as the best way to enhance competition in the short term.
However, the Government might be hesitant to provide that capital itself, given high public debt levels and numerous pressing infrastructure investments.
This opens the door for private or commercial investors. NZX Chief Executive Mark Peterson recently said he has been urging the Government to float some assets on the stock exchange to free up capital for public infrastructure.
The Crown already holds a majority stake in several listed companies, including Meridian Energy and Air New Zealand. It could list 49% of Kiwibank in a public offer to raise sufficient capital for the bank's expansion.
KiwiSaver providers might find it challenging to invest in the bank as a privately held entity due to liquidity requirements. They could invest more easily in a listed company.
Other options include selling a stake to Crown investment entities such as the NZ Super Fund or the Accident Compensation Corporation. This would theoretically keep the bank state-owned, but in practice, these funds could later sell their shares to private investors.
Kiwibank’s parent company, Kiwi Group Holdings, was previously owned by the NZ Super Fund, ACC, and NZ Post. When the latter two wanted to sell their shares in 2022, the Super Fund offered to buy them.
However, the Labour Government declined this offer, as it did not agree to the condition of allowing future commercial partners, and opted to buy the entire group for $2.1 billion.
At the time, Grant Robertson said he would ensure the bank had access to capital and remained entirely Kiwi-owned. However, Labour’s 2023 manifesto did not include any plans for this.
The coalition ministers now overseeing Kiwibank have instructed the state-owned enterprise to explore “avenues” for future growth, and signaled that all options are on the table.
28 Comments
the Government to float some assets on the stock exchange to free up capital for public infrastructure
Don't hold your breath for that to happen. Successive governments wasted 13 years when they could borrow at dirt cheap rates and build better infrastructure.
Truth be told, there is a massive gap of skills, expertise, materials, etc. required to build, produce and operate in this country anymore. All we is write reports, hold endless discussions, pay consultants and ultimately scrap such pursuits.
Until recently CEO of NAB - "Ross McEwan CBE is a New Zealand banker..." and currently "Shayne Elliott is a New Zealand banker, and the chief executive officer of ANZ Bank. They don't want to come/stay here because there's not much for them to do...and we wouldn't be able to match their remuneration cost anyway. NZ is traditionally used a a training ground for banker to go back to their Head Office for a real career.
eg: Ann Sherry,Non-Executive Director NAB ...Ann had a 12 year banking career at Westpac ... including as divisional CEO for Westpac New Zealand ...
The Ak central rail link was approved by the Ak Mayor and National. Don't forget this project.
It was approved when interest rates were very low. They are now a whole lot higher.
Plus the operating costs will be way higher than the original train system.
Its a huge financial disaster from start to finish.
Agreed, better to own 51% of something that dominates the market than 100% of something that fails to make a mark.
The company's values also matter, not just their ownership structure.
Japanese-owned Oji Fibre has a much better employer reputation for good reason than 100% Kiwi-owned Foodstuffs. The latter predominantly hires low-paid migrants for back office roles to keep its wage bill low. Having monopolistic pricing power is not good enough.
"give Kiwibank enough capital to take on the big Australian banks."
The Aussies had a go at this themselves, 40 years ago. Opening up their domestic market to anyone who wanted a banking license to 'add competition' and it worked ! 83 Offshore banking entities from the UK, USA, Canada, Europe, The Middle East, Asia - you name it, they all set up some sort of presence to provide that desired competition. Even the BNZ was there - and we know what happens to them - they went broke. Dragging the parent NZ operations down with them, and eventually they had to be sold to....tada...one of the Big 4, NAB, as a result. Most of the other 83 had a go, and decides that it wasn't worth it, and left again.
So if we really think we can get Kiwibank to compete just with a bit more capital, to use a well quoted Aussie expression, "Tell 'em they're dreaming!"
The Commonwealth Bank of Australia is more than 60 per cent owned by American-based investors. Institutional investors hold a significant portion of CBA shares, with the top 10 institutional holders owning between 0.06% to 2.94% each. The Vanguard Group is the largest institutional shareholder with 5.526% ownership.
https://www.news.com.au/finance/business/us-ownership-of-australias-big…
The coalition ministers now overseeing Kiwibank have instructed the state-owned enterprise to explore “avenues” for future growth
Future growth...sounds like we've got the right people seated at the head of the table.
If they're that desperate to grow, I would have thought someone could come up with a way to magic up some credit for kiwibank and avoid the hassle of listing - surely, we learnt something from covid era bank assistance packages. Perhaps the lack of an opportunity to make personal gains would be frowned upon.
Keep it 100% owned and let distressed FHB's refinance to kiwi bank (who would then take an equity stake in the property in lieu of saving them mortgage sale which could be purchased back later/on sale). Society is already picking up direct costs of our housing policy to the tune of billions in accommodation supplement and social housing anyway so we might as well throw a bone to those that tried to provide their own shelter.
i prefer the Norwegian or Singapore model the government should not directly own any companies and they should be owned in a fund that politicians cannot rort (ramp up dividends above income) to satisfy their ideology and supporters. ie we should never have brought back the above rail portion of kiwirail, we should have only owned the rail and opened up the rest to commercial interests and councils and run it like a road where the users pay in for upkeep.
we should sell TVNZ , NZ post, transpower, break up landcorp and sell that off (except for a few research farms)
when they sold off the power companies i thought they should sell them all except one to keep private companies honest and add extra supply when needed
we would be far better off with those funds invested offshore bringing in foreign capital and income to help pay our way
and we brought back the rail lines for 1 dollar, we should never have brought back the above rail company. we should have instead let private companies like mainfreight or fonterra etc run their own trains and pay a rail user change, kiwirail would have turned into a leasing company either leasing the rolling stock or supplying drivers and leasing a service similar to what happens in the airline industry
we should have only owned the rail and opened up the rest to commercial interests and councils and run it like a road where the users pay in for upkeep.
That's not how Norway runs it's roads. It's also not how New Zealand runs their roads. Users do not pay for upkeep. It's subsidised by general taxation and rates.
Both Norway and Singapore have invested heavily in rail.
In summary you're talking shit.
I wonder what NZ First thinks about this?
https://www.stuff.co.nz/national/4582922/John-Key-reveals-plan-for-asse…
NZ First leader Winston Peters said National's plan to sell off state assets was disastrous. It meant half New Zealand's state assets would soon be owned by Chinese interests because China was one of the few countries with ready cash to invest in countries like New Zealand.
"Selling state assets represents a fraud on the people. It is nonsense to suggest that New Zealand will retain control of companies that are 49 percent privately owned.
"Why would any country sell off key assets that cannot be replaced? The taxpayers own these assets - not a bunch of National Party cabinet ministers."
Jim Anderton pushed for the establishment of Kiwibank to create competition with the Australian owned banks and provide Kiwis with better banking rates and services, and to keep profits in NZ.
What the Al about govt of the day conveniently overlooked in the interest of garnering votes was that you can not offer highly competitive rates without forgoing profit. The cost of money simply doesn’t vary sufficiently to do that.
In addition Kiwibank still does not have the systems to provide high level business banking which is where much of the banking profit comes from.
So Kiwibank has achieved nothing of value for NZ and other than feeling patriotic about having a bank named after our national bird, I can not see any material value in it being govt owned let alone retained.
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