Kiwibank chief executive Sam Knowles is quitting the state owned bank but is prepared to stay until a replacement is found.
(Updates with potential government sell down, NZ Post seeking capital, Knowles denying resignation connected to these moves, Knowles saying Kiwibank needs less than NZ$100 million of capital, detailed quotes from Knowles and Chairman Jim Bolger saying he expects to be replaced later this year by Michael Cullen).
Knowles has been involved with Kiwibank for 10 years, first helping to establish the bank and then leading it. No date has been set for his departure and Knowles plans to take a break.
News of his departure comes just days after Finance Minsiter Bill English said the Government might look to float a minority stake in Kiwibank on the sharemarket. And on Monday Prime Minister John Key said NZ Post, Kiwibank's parent, had asked for capital for the bank following a period of rapid growth.
NZ Post will start an internal and external search for Knowles' replacement.
Knowles told a news conference his departure had nothing to do with what the Government was talking about, nothing to do with board issues or the recently arrived NZ Post CEO Brian Roche, he was in good health and had not had a job offer from Australia.
"The reason I’m leaving Kiwibank is because it’s the right time to leave Kiwibank and it’s the right time for a number of reasons," Knowles said.
These included that the bank had proved its mettle by coming through the recession, with Knowles saying Kiwibank had the best outcome of any of the banks in terms of credit. Secondly, Kiwibank had delivered well beyond its business case put in place 10 years ago. And now a new business case, for the next decade, had been developed and put to the Government.
"We're comfortable where we are and are optimistic they [the Government] will agree to it," Knowles said. "I think it’s the right time for me to stand back and someone else to look at the next 10 years."
The next decade should involve building on the customer base and moving into new markets.
"It’s a natural point in the evolution of Kiwibank for me to stand back and let someone else take over," Knowles added. He said he had been considering leaving for a year or two.
Meanwhile, Knowles said Kiwibank had asked the Government for less than NZ$100 million and that the main issue with Finance Minister Bill English was whether the state-owned bank paid dividends to the Government.
"There are different options, we are not talking large sums of money. Largely the question is whether we pay dividends," Knowles said. "There are different options on the table but we’re talking certainly less than $100 million. It’s not large amounts of money. It’s a couple of hours of government running."
He said the business plan targeted growth of Kiwibank's balance sheet of NZ$2 billion to NZ$3 billion a year over the next decade.
"We’re more talking the debate around risk and return over a 10 year view of how big the Government is comfortable to have the bank and are they comfortable to reinvest in dividends as is happening at the moment."
English, Knowles suggested, was reflecting on the dividend reinvestment when he suggested Kiwibank needed hundreds of millions of dollars. "The dividends that he wouldn’t get."
Asked about a potential partial sale of Kiwibank Knowles said: "Keeping New Zealand control of Kiwibank is part of the value of Kiwibank. Personally I believe that New Zealand control is important."
Later, Chairman and former National Prime Minister Jim Bolger said he expected to be replaced as Chairman later this year, when his term expires, by former Labour Finance Minister Michael Cullen.
See Kiwibank's full statement below:
The Chief Executive of Kiwibank, Sam Knowles, today announced he will be resigning after 10 years involvement in setting up and then leading the company. No date has been set for his departure, but Mr Knowles has said he is prepared to stay until a replacement has been found.
Kiwibank Chairman Jim Bolger said Mr Knowles had literally changed the face of the New Zealand banking industry for ever.
“Sam’s resignation is a huge loss for Kiwibank, but he has set up a strong, robust company that will continue to go from strength to strength. Sam’s impact on the New Zealand banking industry has been immense.
“Sam worked through the proposal to establish a New Zealand-owned bank and then took up the position of chief executive and successfully launched Kiwibank in 2002. Since then the bank has become a major banking competitor attracting 700,000 customers and winning numerous awards for value, innovation and brand values.”
Mr Knowles said he has had a memorable tenure as chief executive, but he would now like to take a break and consider what the future holds. Mr Knowles is director or trustee of a number of organisations including Trust Power, Te Omanga Hospice and the St James Theatre Trust. He thanked the board and staff for their support over the years.
“The outstanding success of Kiwibank is a tribute to a huge number of people. A small dedicated team created the original business case for the bank to operate through the New Zealand Post network and the plans snowballed to what we have today – a very successful bank that is a credit to all involved.”
“I have been inspired over the years by the passion, commitment and enthusiasm of the staff of the bank. And of course there has been fierce loyalty by our customers who have clearly shared the dream of a New Zealand-owned bank for New Zealanders.”
Mr Knowles said he had received strong support from the Kiwibank board and New Zealand Post and a tremendously loyal management team and staff.
“I’m sad to leave, but excited about my own personal future and of course for the future of Kiwibank. I’ve been involved in the Kiwibank project for 10 years and believe that now is the right time to look for new challenges.”
Chief Executive of New Zealand Post (the owner of Kiwibank), Brian Roche, said a search both internally and externally will begin immediately for a replacement for Mr Knowles.