Hon Nicola Willis
Minister of Finance

Kiwibank has been given the green light to compete more vigorously with the big four Australian-owned banks that dominate the New Zealand banking sector.

Finance Minister Nicola Willis announced today that, following a market testing process, Cabinet had approved Kiwibank’s parent company raising up to $500 million of capital to fund the bank’s growth.

“Allowing Kiwibank to raise up to an additional $500 million is the first step towards giving Kiwibank access to the capital it needs to truly compete with the big four Aussie banks while retaining its intrinsic New Zealand identity.

“The Commerce Commission reported last year that New Zealand’s four largest banks did not face strong competition when providing personal banking services.

“Advice to the Government is that an additional $500 million of capital could support up to $4 billion of business lending or $10 billion of home lending.

“To assess interest in Kiwibank, Kiwi Group Capital (KGC) engaged with New Zealand KiwiSaver funds, investment institutions and professional investor groups including Māori institutions.

“KGC has advised there is sufficient interest from professional New Zealand investors groups to proceed.”

Nicola Willis says a future government may choose to publicly list Kiwibank on the stock market, but that won’t occur without an electoral mandate.

Irrespective of any future decisions, the Government has approved measures to safeguard the bank’s New Zealand identity.

These measures include maintaining at least 51 per cent government ownership of KGC for the foreseeable future and, through a Kiwi Share to be held by the Crown, requiring, among other measures:

• a majority of the directors of KGC to be normally resident in New Zealand; and
• Kiwibank maintaining its principal place of business in New Zealand.

KGC has until 30 June 2026 to complete a capital raise, subject to final approval of terms and conditions from shareholding Ministers.

Note:

Kiwibank Capital Q&A

What is the reason for increasing Kiwibank’s capital?

There is insufficient competition in the New Zealand banking sector. This has been confirmed by the Commerce Commission’s market study into personal banking services. It found that New Zealand’s four largest banks do not face strong competition when providing personal banking services.

Will increasing Kiwibank’s capital increase competition in the banking sector?

The advice provided to Government demonstrates that providing Kiwibank with reliable access to growth capital will support it to continue to grow at above market rates and make it more competitive with the major banks.

Is the government intending to publicly list Kiwibank on the stock market?

In the long-term the most accessible source of capital for Kiwibank is through a listing on the public markets. This will not occur without an electoral mandate.

Is there a danger Kiwibank could lose its New Zealand identity or be sold to offshore buyers?

No. Irrespective of any future decisions, the Government has approved measures to safeguard the bank’s New Zealand identity.

These measures include maintaining at least 51 per cent government ownership of KGC for the foreseeable future and, through a Kiwi Share to be held by the Crown, requiring:

• the Government to maintain at least 51 per cent ownership of KGC for the foreseeable future
• a majority of the directors of KGC to be normally resident in New Zealand
• Kiwibank to retain its current company name and trading name
• Kiwibank to maintain its principal place of business in New Zealand
• any potential future foreign investors to be limited to owning a maximum of 20 per cent of Kiwibank’s shares; and
• Kiwibank’s head office to remain in New Zealand.

How was interest in investing in Kiwibank assessed?

KGC engaged with leading New Zealand KiwiSaver funds, investment institutions, and professional investor groups including Māori institutions. The study concluded there was sufficient interest to proceed to the next phase of the process.

Is this a state asset sale?

No. The type of capital raising being contemplated is not an asset sale as all the funds raised are for Kiwibank’s future business growth. There is no return of capital to the Crown to deploy elsewhere and the Crown itself would not sell any shares.

How will the value of investors’ stake be assessed?

The final price will be determined through a competitive process, so a positive result depends on sufficient investor participation and demand.

When will the capital raise take place?

KGC has until 30 June 2026 to complete the transaction, subject to final approval of terms and conditions from shareholding Ministers. This flexibility will allow KGC to take account of market conditions, investor feedback, and Kiwibank financial results releases. Shareholding Ministers will only approve the transaction terms and conditions if risks have been appropriately managed and the transaction is consistent with the Crown’s interests.

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