Government to buy Kiwibank for $2.1 billion

Grant Robertson says the acquisition is a straightforward transfer of assets and won't change the overall value of the Crown's consolidated balance sheet. Photo / Hagen Hopkins, Getty Images

The Government has agreed to buy Kiwibank for $2.1 billion from state-owned shareholders that want out.

The Government will acquire 100 per cent of Kiwi Group Holdings - the parent company of Kiwibank and NZ Home Loans - provided the proposed transaction gets Reserve Bank approval.

Finance Minister Grant Robertson said he was prepared to put further capital into Kiwibank if required.

KGH is 53 per cent owned by New Zealand Post, 25 per cent by the New Zealand Superannuation Fund, and 22 per cent by the Accident Compensation Corporation.

An ongoing shareholding in Kiwibank did not fit NZ Post's and ACC's long-term strategic and investment plans, Robertson said.

NZ Super Fund chief executive Matt Whineray said, "We initially considered buying some or all of NZ Post's stake and discussed this matter with the Government, but ultimately weren't able to get agreement on two key issues relating to the asset.

"Specifically, we sought the flexibility to introduce private sector capital and governance capabilities into the business, and as a wholly-commercial investor we sought to preserve all options for exiting the investment in the future.

"These requirements understandably did not fit with the Government's objective for the ownership of Kiwibank."

When ACC and the NZ Super Fund became shareholders in KGH in 2016, they agreed the Government had first right of refusal over any future sale of shares.

"The transaction ensures Kiwibank remains 100 per cent Kiwi-owned, a bottom line pledge that the previous National Government also made in 2016 when the current ownership arrangements were entered into," Robertson said.

The finance minister said the Government was grateful for the investment and support shareholders gave KGH over the past 20 years.

"The new ownership structure simplifies our ability to fully support Kiwibank to meet its future potential," Robertson said.

"This is a win-win for the Crown, Kiwibank and for New Zealanders.

"Kiwibank and NZ Home Loans will continue to operate independently and at arm's length from the Government."

Crown ownership of KGH will be expressed through a newly incorporated Schedule 4A company called Kiwi Group Capital with a separate board.

"The process of acquisition is a straightforward transfer of assets and it will not change the overall value of the Crown's consolidated balance sheet," Robertson said.

It requires the Government to fund its contribution for the purchase, which will be done through the multi-year capital allowance.

"I want to be clear that this will be business as usual for both Kiwibank and New Zealand Home Loans staff and customers," Robertson added.

"With Kiwibank staying in New Zealand hands, New Zealanders can continue to bank with a trusted, credible and competitive banking option that will remain fully locally owned."