Kiwibank has been given the green light to raise up to $500 million in new capital, a move the Government says will help the New Zealand-owned bank better compete with the big four Australian-owned banks.
Finance Minister Nicola Willis announced on Wednesday that, following a market-testing process, Cabinet had approved Kiwibank’s parent company to raise up to $500 million of capital to fund the bank’s growth.
Finance Minister said the boost aims to strengthen Kiwibank’s ability to compete with dominant Australian-owned banks. (Source: 1News)
“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.”
A Commerce Commission report released in August last year found the banking sector was “uncompetitive’ and that the four big Australian-owned banks made high profits while Reserve Bank rules made it hard for smaller banks to challenge.
Several recommendations were made, including to increase Kiwibank’s capital funding.
Willis said advice to the Government was that an additional $500 million of capital could support up to $4 billion of business lending or $10 billion in 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.”
They advised her there was “sufficient interest” from professional New Zealand investors groups to proceed.
While the capital raise is not a state asset sale—no Crown shares will be sold and all funds raised will go toward Kiwibank’s future growth—Willis said a future government may consider a public listing of the bank but that this would not happen without an electoral mandate.
The Government had also approved measures to safeguard the bank’s New Zealand identity.
These include:
- Maintaining at least 51% government ownership of KGC for the foreseeable future.
- Requiring a majority of KGC’s directors to be normally resident in New Zealand.
- Ensuring Kiwibank retains its current name and principal place of business in New Zealand.
- Limiting any future foreign investors to a maximum of 20% ownership.
- Keeping Kiwibank’s head office in New Zealand.
KGC had until June 30, 2026 to complete a capital raise which would be subject to final approval of terms and conditions from shareholding Ministers.
KGC chairperson David McLean said the Government had reaffirmed its commitment to supporting Kiwibank as a competitive, New Zealand-owned alternative to the large banks.
“The capital raise process aims to provide Kiwibank with capital to continue its above market growth and enhance its competitive position while ensuring all funds raised are invested into New Zealand’s future. There will be no return of capital to the Crown, and no changes for Kiwibank customers.”
Kiwibank chief executive Steve Jurkovich said the bank existed to challenge the status quo and disrupt the banking sector for the benefit of New Zealanders.
“Delivering on our purpose of ‘Kiwi making Kiwi better off’ is what differentiates Kiwibank and drives our performance, and that is what we continue to be focused on. Any capital raise would be structured to ensure Kiwibank’s continued role to improve services and pricing for consumers.”
