Post To Establish Low-Fee Personal Banking Service

For immediate release 20 February 2001

NEW ZEALAND POST TO ESTABLISH LOW-FEE PERSONAL BANKING SERVICES

New Zealand Post welcomed Shareholder approval today for the provision of equity to establish banking services within the New Zealand Post retail network.

Chairman Ross Armstrong said New Zealand Post was pleased to move forward with the business of building a bank that would add significant value to the company and its owners, the people of New Zealand.

¡§This will be a bank for all New Zealanders. It will offer a range of simple, easy to understand services that represent value for money for customers, the convenience of the Post Shop network and the benefit of being New Zealand owned.

¡§We will provide choice for customers seeking low-fee personal banking services that has been missing since the withdrawal of Countrywide, Trustbank and Post Bank.¡¨

New Zealand Post Chief Executive Elmar Toime said the new bank that opens for business in early 2002 would change the nature of personal banking services in New Zealand.

¡§New Zealand Post will bring to personal banking the same expertise that has made the 40-cent stamp the lowest priced postage in the developed world.

¡§Within its first three months, the new bank will have the largest branch network in the country and will be the only bank to offer customers the convenience of retail trading hours -- that means weekend banking.

¡§The new bank will have a number of competitive advantages that will allow it to offer personal banking services with lower fees.

¡§New Zealand Post¡¦s nationwide network of Post Shops will allow us a lower cost of entry into retail banking services. The bank will use new technologies that will mean lower cost structures and greater capabilities than the 20-year old legacy systems of the major banks.

¡§The new bank will also draw upon New Zealand Post¡¦s extensive support services and will have the advantage of a strong brand that is trusted in the community.¡¨

Mr Toime said there was a gap in the market for a nationwide bank focussed on low-fee personal banking services.

¡§With its Post Shop retail network, experience in payments and transactions and strong brand and community reputation, New Zealand Post is the best placed of any entity, either public or private, to fill that gap.¡¨

Work will now begin to establish a separate subsidiary company, board of directors, and CEO for the new bank. An audit of the retail network will also begin to enable a refit to bring the majority of Post Shops to a level of security and service required for banking.

KEY FACTS

Banking Services:

„X The new bank will offer savings accounts, EFTPOS card, chequebooks, credit cards and mortgages.
„X The new bank will also provide telephone and Internet banking, and access to ATMs.
„X The new bank will not offer corporate or business banking services.

Banking Business Case:

„X The new bank will be profitable in three years
„X Target is 100,000 customers. This is equivalent to approximately two new customers a week per Post Shop over three years.
„X The new bank will be formed as a wholly owned subsidiary of New Zealand Post, with its own Board including independent directors.

Post Shop retail network:

„X New Zealand Post has 321 retail outlets, consisting of 153 corporate Post Shops, 137 franchise Post Shops, and 31 Books & More stores. The number of Post Shops has increased from 245 in 1995.
„X All 321 retail outlets are connected by the Post Link computer system.
„X The retail network will be audited to determine suitability of each site for banking.
„X A refit will bring the majority of retail outlets to security and service levels required for banking services.
„X Between 500,000 to 700,000 customers visit the retail network each week.
„X Financial transactions worth $2 billion were processed last year.
„X New Zealand Post began processing agency banking services in 1997.

ENDS

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