The New Zealand Government has announced plans to restructure the ownership of Kiwibank in a way that could increase its ability to compete harder for market share with its Big Four Australian-owned rivals.Kiwibank has been wholly-owned by the state-owned New Zealand Post Group since its formation in 2002, but the postal operation's profitability has plunged and its ability to fund Kiwibank's demands for fresh capital has dried up in line with mail volumes over the last five years.New Zealand Post chairman Sir Michael Cullen announced the proposed sale of 45 per cent of Kiwibank Group Holdings to the state-owned New Zealand Superannuation Fund and the Accident compensation Corporation in a NZ$495 million deal that would allow NZ Post to pay the Government a big special dividend, while also allowing the Government to retain 100 per cent control.Finance Minister Bill English and Cullen said the deal would strengthen Kiwibank's board and allow it to look again at investing fresh capital to grow the bank.Since 2009 Kiwibank has dialled back its appetite for market share growth to concentrate on growing its profits to produce a dividend to help its parent produce dividends for the Government. That allowed retail bank net interest margins in New Zealand to expand from around 200 basis points in early 2009 to around 220 basis points in early 2015. Kiwibank's launch and aggressive moves to win market share with low mortgage rates fueled a margin squeeze between 2003 and 2009 that drove margins down from 270 points to 200 points. The deal, which is yet to be confirmed, would see ACC buy 20 per cent of Kiwi Group Holdings, which includes Kiwibank, Kiwi Wealth Management and Kiwi Insurance, while the NZ Super Fund would buy 25 per cent in a deal that values all of Kiwi Group Holdings at NZ$1.1 billion. They have agreed not to sell their stakes for five years after the deal and the Government has a first right of refusal to purchase the stakes if they do decide to sell.New Zealand Post's guarantee of Kiwibank's obligations appeared to have been a key factor in the decision, given its core postal operations are losing around NZ$30 million a year because of a fall in mail volumes of 60 million letters a year. Cullen said the guarantee would be removed and English said it would be replaced with a direct capital underwrite facility equivalent to an existing NZ$300 million uncalled preference share issue already in place between New Zealand Post and Kiwibank.Standard and Poor's said it had put Kiwibank's A+ credit rating on review for a downgrade of one notch because of the expected removal of the New Zealand Post guarantee.Cullen pointed to Kiwibank's eventual need for fresh capital that New Zealand Post could not provide, and which the Government has been reluctant to stump up in the past. In the last three years Kiwibank has had to raise capital through tier one hybrid debt issues."Although it self-generates capital, it is anticipated that over time the