Finance Minister Nicola Willis sees 'a lot of ways' to support Kiwibank's NZ identity after bank's CEO says it doesn't make sense at this stage to rule out offshore capital

Finance Minister Nicola Willis won't be drawn on whether plans for a $500 million capital raise for state owned Kiwibank could include foreign investment.

Following a recommendation from the Commerce Commission's market study on personal banking services, Willis in December instructed Kiwibank to raise $500 million from private investors to bolster its ability to compete with the big four Australian owned banks.

Speaking on NZME's Markets with Madison recently, Kiwibank CEO Steve Jurkovich called for an open minded approach to where the $500 million comes from.

"...it doesn't make sense to me that you would at this stage say no one from offshore. Why would you say that at this stage when you don't actually know what that means? I think you have to be respectful to investors to allow them to be part of that conversation and say; Hey you know if someone turned up and they were fabulous and brought a whole lot of technical capability, or market presence or brand or whatever they bring in terms of capability, why would you say no to them?" Jurkovich said.

Asked by interest.co.nz about the possibility of foreign investment into Kiwibank, Willis said "engagement with the market" was currently taking place to see what interest there is in investing in Kiwibank to help it grow.

"I will be updated on that in the next few months, and then I'll take proposals to Cabinet, and I'd rather see what that engagement shows before I make any judgements," Willis said.

Pressed further she said; "What I recognise and support is that an important part of Kiwibank's identity is that it's kiwis' bank, but I think there's a lot of ways that we can support that."

Kiwibank was launched in 2002 as a subsidiary of NZ Post. Jim Anderton, the bank's political father, wanted a New Zealand-owned bank providing services for low and middle-income earners. A "People's Bank," Kiwibank would keep profits onshore, end rising bank fees and return banking services to smaller towns after a drop in branch numbers from 1500 in 1993 to 900 in 1999.

In 2016 the NZ Super Fund and ACC bought into Kiwibank, which was by then the country's fifth biggest bank. In 2022, under the previous Labour government, the Crown bought out NZ Super, NZ Post and ACC in a transaction valuing Kiwibank's parent company at $2.1 billion after NZ Super had wanted the option of private sector investment being made in the bank.

In last year's market study the Commerce Commission recommended the Government, as Kiwibank's owner, should consider what was necessary to make Kiwibank a disruptive competitor, including how to provide it with access to more capital. 

"In the shorter term, capitalising Kiwibank appears to have the greatest potential to constrain the major banks and disrupt a market that is otherwise stable due to lack of competition," the Commerce Commission said.

A spokesperson for Barbara Edmonds, Labour's finance spokesperson, said Kiwibank was established as a disruptor to foreign owned banks.

"To clarify, being supportive of a capital raise doesn't mean we are supportive of listing it [on the sharemarket]," Edmonds' spokesperson said.

Willis has said the Government could consider a Kiwibank initial public offering after next year's election.

*Additional reporting Dan Brunskill.

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