There will be no IPO of Kiwibank, probably, before 2028. In the meantime New Zealand’s government yesterday said it mandated Kiwibank to New Zealand professional investor groups about a potential investment of up to NZ$500 million in the bank.
For most of this year it’s been clear Kiwibank would soon be let off the leash and tasked to negotiate external investment from one or more suitably Kiwi strategic investors.
“If a private placement occurs this would be an asset capitalisation, not an asset sale, as all funds raised would be for Kiwibank’s future business growth” Nicola Willis, the finance minister said.
“There would be no return of capital to the Crown to deploy elsewhere.
“In the long-term, the most accessible source of additional capital for Kiwibank is likely to be through a public share offering. However, Kiwibank will not be ready for this until its current digital transformation is completed – expected by 2028 – so no decision on an initial public offering will be made in this term of government.”
Willis said the government understands that before making any investment, institutional investors will require a clear option to sell shares.
“If an Initial Public Offering is not approved at a later date, this could take the form of having an option for investors to sell their shares back to the Crown at an independently assessed fair value” Willis said.
Nicola Willis says she has also communicated her expectations that the Reserve Bank to place a greater emphasis on banking competition across a range of its policies and actions.
This is in the form of a revised Financial Policy Remit and a detailed set of expectations to the Reserve Bank.
“The Financial Policy Remit, issued today, emphasises the importance the government places on competition in the banking sector” Willis said, though the RBNZ will still be free to set its own course.
“The Government expects the Reserve Bank will meaningfully train its focus on competition while pursuing its financial stability objective” Willis said.
“The new Letter of Expectations to the Reserve Bank outlines my expectations that the bank will prioritise, including:
• expanding access to the exchange settlement system
• reviewing risk weightings for a range of bank lending
• reviewing minimum capital thresholds for new entrants into the banking sector