HOT TOPICS:   2015 series  |  Oil   | Macro-prudential tools                                   RESOURCES:    Economic calendar   |   Cashback incentives

Breaking news

Stats NZ says NZ GDP rose 1.0% in September quarter from June quarter, slightly above economists' forecasts
MORE SOON

The comment stream

Reader poll

Which country's economy is likely to improve the most in 2015?

Choices

Join the Interest community to be a registered commenter so you can:
- Edit your comments
- Avoid the CAPTCHA
- Vote on comments
Register Here

Already registered? log back in here ..

Forgotten your password? No problem! Click here

Taxpayers' 'uncalled capital facility' behind Kiwibank's parent NZ Post is worth NZ$300 million

Posted in News

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.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

6 Comments

and who is head rabbi at NZ

and who is head rabbi at NZ Post  ?  - the mother of all big govt spenders,  Dr Cullen  !

Bill English could learn from

Bill English could learn from Cullen's tight-fisted nature. Check the stats on Govt. debt over the last three years, a miser like Cullen is jsut what we need.

Articles, here and in the

Articles, here and in the MSM, should stop stating "The Government will pay for/subsidise/arrange for/bail out/guarantee... or whatever..." and instead start printing "TheTaxpayer will pay for/subsidise/arrange for/bail out/guarantee...". That might get across the message that we will all have to pay for whatever it is. 

Nicholas, this story does

Nicholas, this story does that and I always endeavour to do that. In fact the reason I wrote this article was specifically because the government wouldn't tell us precisely how much of our money they had earmarked for this backstop facility last year which I thought was scandalous.

Thanks Gareth for the update

Thanks Gareth for the update ... this SOE can now perform as poorly as it desires without risking it's artificially stacked credit rating bankrolled by you and me. Once his RWC commitments are fulfilled, is it possible to have Roche's salary paid by reality cheque?

Come on nina...what's nz

Come on nina...what's nz without some gravyboats...all aboard.....that's what SOEs are for!