Tuesday, April 23, 2024

Government to take control of Kiwibank

The Government has acquired 100% of Kiwibank’s parent company, Kiwi Group Holdings (KGH), ensuring the bank remains fully Kiwi-owned, Finance Minister, Grant Robertson said today.

“The transaction ensures Kiwibank remains 100% Kiwi-owned, a bottom line pledge that the previous National Government also made in 2016 when the current ownership arrangements were entered into,” Mr Robertson said.

KGH, which also operates New Zealand Homes Loans, had been owned by NZ Post, ACC and the NZ Super Fund. Under the terms of the agreement when ACC and NZ Super Fund became shareholders in 2016, the Government had first right of refusal over any future sale of shares.

“While the Crown essentially owned KGH through Crown-owned entities, an ongoing shareholding in Kiwibank did not fit NZ Post’s and ACC’s long term strategic and investment plans. NZ Super Fund had been interested in purchasing a majority holding in KGH, but withdrew its interest as it did not align with the Government’s commitment to public and New Zealand ownership,” the Minister said.

“The Government is grateful for the investment and support given to KGH from the departing shareholders over the past 20 years. Their contribution and commitment, particularly collectively since 2016, has set Kiwibank up strongly for future growth.”

Minister Robertson said the new ownership structure simplifies the Government’s ability to fully support Kiwibank to meet its future potential.

The transaction is subject to regulatory approval by the Reserve Bank.

“The Government is fully committed to supporting Kiwibank to be a genuine competitor in the banking industry – ensuring the bank has access to capital to continue to grow on a commercially sustainable basis and offer a viable and competitive alternative for New Zealanders,” said Mr Robertson.

“This is a win-win for the Crown, Kiwibank and for New Zealanders.”

He said Kiwibank and NZ Home Loans will continue to operate independently and at arm’s length from the Government. The Crown’s ownership of KGH will be expressed through a newly incorporated Schedule 4A company, Kiwi Group Capital (KGC) with a separate board.

“The transaction values KGH at $2.1 billion. The process of acquisition is a straightforward transfer of assets and it will not change the overall value of the Crown’s consolidated balance sheet.”

“It does require the Government to fund its contribution for the purchase, which will be done through the multi-year capital allowance. This means the cost to purchase is already part of the borrowing programme published at Budget 2022.

“I want to be clear that this will be business as usual for both Kiwibank and New Zealand Home Loans staff and customers.

“With Kiwibank staying in New Zealand hands, New Zealanders can continue to bank with a trusted, credible and competitive banking option that will remain fully locally owned. With a significant commitment from the Crown to invest in the bank’s future success, Kiwis can be assured Kiwibank has a very bright future,” Mr Robertson said.

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