The New Zealand (NZ) government has agreed to acquire 100 percent of Kiwi Group Holdings (KGH), the owner of Kiwibank, for $2.1 billion (US$1.3 billion).
KGH has operated under three Crown-owned entities—NZ Post, the Accident Compensation Corporation (ACC), and the NZ Super Fund.
Finance Minister Grant Robertson said that while the Crown essentially had full ownership of Kiwibank through the three entities, NZ Post and ACC had sought to withdraw as shareholders due to a divergence in long-term investment plans.
Matt Whineray, the chief executive of NZ Super Fund, revealed the company had considered buying some or all of NZ Post’s stake (53 percent), but ultimately was unable to agree on two key issues.
“Specifically, we sought the flexibility to introduce private sector capital and governance capabilities into the business, and as a wholly-commercial investor we sought to preserve all options for exiting the investment in the future,” Whineray said.
Keeping It NZ-Owned
Established in 2002, Kiwibank is the largest New Zealand-owned retail bank. Overall, it is the fifth largest after the New Zealand’s “Big Four” banks, which are all owned by the Australian Big Four.“The transaction ensures Kiwibank remains 100 percent Kiwi-owned,” Robertson said.
“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.”
The transaction is subject to approval by the Reserve Bank of New Zealand.
Steve Jurkovich, the chief executive of Kiwibank, welcomed the news and said it would enable the bank to work on its growth ambitions.
“The key to having a positive long-term impact is remaining focused on being competitive and balancing performance and purpose. The refreshed arrangements will ensure a continuance of good governance and ownership stability,” he said.
Robertson said the new ownership structure would “simplify” the government’s ability to support Kiwibank.
Robertson said the bank would continue to operate “at arm’s length” from the government and would have no impact on customers.
He added that the cost of the acquisition goes under the budget’s existing borrowing programme.
