Chairman, deputy leave Kiwibank after capital injection

The chairman of Kiwibank Rob Morrison and his deputy Rhoda Phillippo will resign from the board this week following what the bank said was a period of transition which saw the NZ Super Fund and the ACC take positions in the lender late last year.

Morrison, who is also chairman of Wellington-based investment bank HRL Morrison, will be replaced by Susan Macken, a former director of the BNZ, who was appointed to the Kiwibank board last year. The Kiwibank board will appoint a deputy chair.

Kiwibank said Morrison and Phillippo had led Kiwibank through a period of significant growth since they joined the board in 2011 and 2016, respectively.

Under Morrison's leadership Kiwibank had become firmly established as a strong New Zealand-owned bank in a sector heavily dominated by Australian-owned banks, Kiwibank said.

"It has reported sustained profitability and growth in all key areas of customer numbers, loans and deposits through that time," it said.

The sudden departure of Morrison and Phillippo just days after shareholders answered a call for additional equity funding did not reflect any dissatisfaction about the state-owned bank's governance, a spokesman for the bank told BusinessDesk.

Last October, NZ Post sold just under half of Kiwibank to The New Zealand Superannuation Fund (25 per cent) and the Accident Compensation Corp ( 22 per cent) for $493.5 million.

Kiwibank hit the headlines in mid-March when, in what one bond market specialist said was "extremely rare" move, it pulled a A$175m bond issue from the market.

The bank's move was prompted by a preliminary decision from the Reserve Bank, which held that the bonds did not comply with its Capital Adequacy Framework requirements.

Kiwibank had been told that the Reserve Bank had formed a preliminary view - yet to be finalised - about its tier 2 convertible subordinated bond which was issued on June 6, 2014, and its additional tier 1 perpetual bond issued on May 27, 2015.

The issue related to a technical interpretation matter and in Kiwibank's view does not in any way affect the quality of the capital represented by the Kiwibank bonds, Kiwibank said at the time.

Last week, Kiwibank's shareholders NZ Post, the NZ Super Fund and ACC said they would subscribe for $247m of common equity in Kiwibank in response to the Reserve Bank's stance.

Kiwibank said it remained of the strong view that its existing convertible capital instruments were compliant and that it was working with the Reserve Bank to resolve the matter.

Massey University Banking expert David Tripe said the issue centred on whether or not Kiwibank's supplementary capital instruments could be deemed as being capital.

"That [decision] obviously caught them by surprise and we don't understand enough about what the problem was," Tripe said.

A Reserve Bank spokesman told the Herald that it does not comment on issues it has with individual banks.

- Additional reporting BusinessDesk