20 February 2001 Media Statement

NZ Post gets go-ahead for bank

“New Zealanders want some of our strategic assets to be owned in New Zealand. They are tired of branch closures and rising fees,” Deputy Prime Minister Jim Anderton said today.

“A new bank will be the first major kiwi-owned asset in decades. It will mean new branches open, and fees that are on average 28% lower than existing fees.”

The Government has approved NZ Post's plan to establish a new publicly-owned bank after accepting a business case showing the new bank will make profits after a commercially reasonable three year start-up phase.

The bank will be set up as a wholly-owned subsidiary of New Zealand Post, with its own board. Details of the bank’s operations, including its name and branch locations, would be finalised by the independent board. It is expected that the bank will open this year.

Jim Anderton said the bank would be convenient and low cost, and it would retain profits in New Zealand.

“Over time, the bank will significantly enhance the value of New Zealand Post and help it to retain its position as a very successful public enterprise and New Zealand’s most respected company.

“The business case for the new bank is strong and it has been supported by independent scrutiny. It has been put together by a very talented team with wide experience of the banking industry, with all the expertise of New Zealand Post as one of New Zealand’s most successful and trusted businesses.

“The business case shows New Zealand Post can provide better service and lower fees because it will have a lower cost structure and access to better technology. New Zealand Post already has an extensive branch network and a trusted brand.

“The Government has received dividends of $468 million since NZ Post was established as an SOE in 1987. New Zealand Post needs to develop new revenue streams if its value as a New Zealand asset is to be protected.

“The Government will provide New Zealand Post with an immediate cash injection of $72.2 million and forego up to $6 million in dividends this year. Once the bank starts to make profits it will exceed NZ Post's target rate of return on shareholders’ capital of 11.7%. After a decade, the bank could be worth $500 million with an Internal rate of return of 23.6%.

“The bank will have a positive effect on the New Zealand economy. It will push down bank fees, meaning millions more dollars more will circulate in the economy. Second, it will help to rebuild regional New Zealand by opening services in areas where previously they were closing.

"Repeated public opinion surveys show that New Zealanders want this bank. I believe they will be more than satisfied with its performance," Jim Anderton said.

ENDS

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