The Reserve Bank will recognise two bonds issued by state-owned Kiwibank as regulatory capital under the Capital Adequacy Framework, having previously rejected them.
The ruling covers $100 million Tier 2 convertible subordinated bond issued in June 2014 and $150m of Additional Tier 1 perpetual bonds issued by Kiwibank subsidiary Kiwi Capital Funding Ltd (KCFL) in May 2015.
Kiwibank said that the RBNZ has issued a non-objection letter about the bonds after the lender made changes to address the central bank's concerns. Previously the bank concluded Kiwibank had levels of control or significant influence over KCFL it viewed as inconsistent with the securities qualifying as regulatory capital.
The lender cancelled an A$175m (NZ$188.5m) bond issue in March as a result of the RBNZ's preliminary decision and subsequently, shareholders New Zealand Post, the New Zealand Superannuation Fund and Accident Compensation Corp poured in a collective $247m in new equity capital to ensure Kiwibank's capital stayed within the regulator's limits.
Kiwibank's chief executive Paul Brock said what now happens to that $247 million is a decision for the bank to make.