Jon Hartley, chair, Kiwibank
Kiwibank will have a more efficient capital structure and, probably, a more supportive – single – shareholder, with the New Zealand government announcing that, subject to regulatory approvals, it has acquired 100 percent of Kiwibank’s parent company Kiwi Group Holdings (KGH).
The NZ government is paying NZ$2.1 billion for KGH, using its multi-year capital allowance. This represents a small discount to the net assets of the bank as at June 2022.
Stuff reports that ACC, which owned 25 per cent of KGH, and NZ Post, which owned 53 per cent, wanted to exit their investments.
The NZ Super Fund, which owned the remaining 22 per cent, was interested in buying some or all of NZ Post’s stake, Stuff reports - but wanted the flexibility to bring in private capital and the option to sell to private investors in the future, which the government rejected.
The move to full, direct government ownership does not shut the door on the bank’s options to secure outside, private investment, though for now it makes this option unlikely.
Over the year to June 2022, Kiwibank reported a net profit of NZ$132 million, up NZ$5 million and a record for the bank.
It had a total capital ratio of 13.6 per cent.
Moody's Investors Service yesterday affirmed Kiwibank’s long-term ratings at A1 with a stable outlook and short-term deposit, and short-term ratings at Prime-1.
Moody's said it believes that the ownership transfer “reinforces the agency's view that there is a high likelihood of the bank receiving government support during times of stress. Moody's assumptions regarding government support have not changed under the new ownership structure ... and the bank's position as a key domestic player in the New Zealand banking system remains unchanged.
“The affirmation of the rating reflects Kiwibank's very strong asset quality, which has remained resilient throughout the pandemic, reflecting the bank's focus on low-risk residential mortgages. The bank's strong deposit franchise is primarily comprised of retail deposits, underpinning its stable funding profile.
“Whilst Kiwibank's increased focus on business lending has contributed to a decline in its regulatory capital ratios, the bank remains well-capitalised,” Moody’s said, “especially in the context of global bank capital as the New Zealand bank regulator's capital standards are more conservative than other advanced countries, leading to lower reported ratios.”