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.
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