By Gareth Vaughan

The taxpayer funding the government put in place for New Zealand Post last year to help maintain its credit rating and subsidiary Kiwibank's growth, which is to be called only in an emergency, is worth NZ$300 million.

The so-called uncalled capital facility was revealed in August last year by Finance Minister Bill English, SOEs Minister Simon Power and NZ Post CEO Brian Roche. However, its specific value was kept secret, with Roche merely saying it was valued in the low hundreds of millions of dollars.

However, NZ Post's financial statements for the year to June 2011 disclose that the facility, on commercial terms which can be drawn in response to a "significant unforeseen event," is worth NZ$300 million.

English and Power said last year provision of the facility came after a request from the NZ Post board for support to enable the company to maintain its AA- Standard & Poor's credit rating while Kiwibank continues with a growth-focused business plan. The ministers said the move complemented other government measures such as allowing Kiwibank to retain profits and requiring a lower dividend from NZ Post.

Kiwibank recently said its June year profit more than halved to NZ$21.2 million as provisions for bad debt surged NZ$67.6 million to NZ$87.1 million. However, the bank's CEO Paul Brock predicted better times ahead for the state owned bank which grew annual lending by 10%, or by NZ$1.08 billion, way ahead of the 2.6% growth achieved by the fastest growing of the Australian owned banks, BNZ.

Meanwhile, NZ Post recorded a NZ$35.6 million June year loss, versus a previous year profit of NZ$1.3 million. It said the Canterbury earthquakes cost it NZ$29.1 million. NZ Post will pay the government NZ$2.5 million in annual dividends, down from NZ$5.7 million the previous year.

NZ Post can call on the uncalled capital facility only in certain defined circumstances, such as Kiwibank experiencing a substantial shock event beyond its own resources and beyond the resources of its parent. It says the facility is vital in helping maintain a credit rating that helps Kiwibank compete with Australian owned rivals ANZ, ASB, BNZ and Westpac.

This article was first published in our email for paid subscribers this morning. See here for more details and to subscribe.