The New Zealand Government will provide further financial support for Kiwibank without tipping in any further cash, at least not now.The government yesterday pledged to provide an uncalled capital facility to Kiwibank, through the bank's owner, NZ Post, aimed at supporting its credit rating and in turn removing any hindrance to the bank's growth The rating will ensure NZ Post doesn't suffer any downgrade in its credit rating because of a drag from Kiwibank.Uncalled capital of the NZ government currently comprises provisions to international institutions like the World Bank, Asian Development Bank, European Bank for Reconstruction and Development and Bank for International Settlements. These amounted to NZ$2.5 billion at June 2009.The government did not spell out the size of the uncalled capital but it is expected to be in the low hundred millions. Kiwibank's current capital stands at NZ$722.1 million, up 39 per cent from the year before. This includes NZ$135 million of subordinated debt.The uncalled capital will be provided on commercial terms and a key requirement is NZ Post can call the capital only in certain defined circumstances, such as Kiwibank experiencing a substantial shock event beyond its own resources and beyond the resources of its parent.Kiwibank's capital requirement to support its growth has always generated a lot of debate, mainly centred on whether the conservative government should sell the bank, versus the case for the government investing more capital.  In a way, the government has been supporting the bank by allowing it to retain profits, and requiring NZ Post to pay low dividends.Management of privately owned (and mostly Australian owned) banks periodically state their dismay at the uneconomic pricing of Kiwibank. Ralph Norris, managing director of Commonwealth Bank (the owner of ASB), told Radio New Zealand two weeks ago that Kiwibank was not profitable enough.In March 2009, when Standard & Poor's  last reaffirmed the AA- rating of NZ Post it said there was potential for further deterioration in asset quality of Kiwibank and the biggest risk to NZ Post's rating remained the impact of its ownership and guarantee of the bank.Since then, Kiwibank's asset quality has worsened, with total impaired assets rising to 0.31 per cent of total assets in June 2010 from around 0.18 per cent last year.  In the last year, Kiwibank's total assets have grown 18 per cent to NZ$12.2 billion, with a 23 per cent increase in loans and advances.Retail deposits last year increased just three per cent to NZ$6.9 billion as much of the increased funding came from wholesale deposits, which grew a whopping 118 per cent to NZ$3.38 billion.Total capital ratio under Basel II grew to 12 per cent compared with the minimum regulatory capital requirement of eight per cent. During the year, capital was boosted by a NZ$15 million injection from NZ Post and a NZ$150 million perpetual preference share issue.