Kiwibank has been given the green light to compete more vigorously with the big four Australian-owned banks that dominate the New Zealand banking sector.
Finance Minister Nicola Willis announced today that, following a market testing process, Cabinet had approved Kiwibank’s parent company raising up to $500 million of capital to fund the bank’s growth.
“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.
“The Commerce Commission reported last year that New Zealand’s four largest banks did not face strong competition when providing personal banking services.
“Advice to the Government is that an additional $500 million of capital could support up to $4 billion of business lending or $10 billion of home lending.
This is a smart move, for a number of reasons.
- Having private capital in Kiwibank will be beneficial with those shareholders being able to push for greater commercial discipline
- Kiwibank is too small to compete effectively with the larger banks. Access to more capital means they should be able to increase their market share
- By using private capital, the government doesn’t ned to borrow money. I would rather the Government put $500 million into hospitals and schools, than a commercial bank – as should any sane person.
David Farrar runs Curia Market Research, a specialist opinion polling and research agency, and the popular Kiwiblog where this article was sourced. He previously worked in the Parliament for eight years, serving two National Party Prime Ministers and three Opposition Leaders
2 comments:
And about time. KiwiBank was always a political gimmick , created by a Labour Governmet for the sole purpose of buying Jim Anderton's vote. Once he departed the stage It should have been disposed of. Government has no business owning a bank. Or a television station. Or an airline., Or an electricity generator. Or a railway company.
A good move to bring on some real competition that will hopefully help line Kiwi pockets on both sides of the ledger. But, I do hope a message has been given to tone down the 'woke' nonsense that Kiwibank espouses. We are not all having gender identity issues, nor do the majority consider a smidgen of a certain genealogy important. Cater to the minorities, and the masses are likely to give you a wide berth.
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