NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business / Small Business

Liam Dann: Let's fuel-inject Kiwibank and challenge Aussie dominance

Liam Dann
By Liam Dann
Business Editor at Large·NZ Herald·
7 Dec, 2019 04:00 PM5 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Opportunities could open up for Kiwbank. Photo / File

Opportunities could open up for Kiwbank. Photo / File

With the big capital review behind us and the big four Australian banks promising to be on their best behaviour, what should we do now to further shore up the financial sector?

How about giving Kiwibank a fuel injection so it can offer the Aussies some real competition in the New Zealand market?

When you consider that about 90 per cent of the market is controlled by the four Australian giants, it's hard to see how a serious local player would be a bad thing.

The most logical way to get Kiwibank up to a meaningful competitive scale would be by partially floating it on the NZX, retaining control but taking some cash which could be reinvested in the business.

That would also give the NZX a much needed boost, and open Kiwibank up to direct investment by local KiwiSaver funds and local institutions.

Advertisement
Advertise with NZME.

READ MORE:
• Date locked in for controversial bank capital decision
• Home loan interest rates set to rise off bank capital increase
• Banks need to raise $20 billion to meet tough new Reserve Bank requirements
• Premium - Reserve Bank defends one in 200 year calculation, on eve of capital announcement

Yes, that would mean a small percentage of foreign ownership and it would certainly be politically unpalatable with this Coalition Government, which maintains an ideological opposition to state assets sales.

Despite that opposition, the Government has never contemplated nationalising any of its current mixed-model ownership companies - presumably because they have all been unmitigated success stories.

Advertisement
Advertise with NZME.

If parties like New Zealand First and the Greens are serious about lessening foreign corporate dominance in this country, they should be open to unshackling Kiwibank.

To be fair, both these parties would likely be okay with scaling Kiwibank up, they'd just prefer to do it directly with taxpayer money to retain 100 per cent control.

The more centrist Labour Party seems a bit caught between not wanting to sell down and not wanting to nationalise.

But if they stay in power they may need to act on Kiwibank.

The sale of 47 per cent to the NZ Super Fund and ACC in 2017 helped put the ownership structure on a slightly more commercial footing but was really a stop-gap measure.

If we want Kiwibank to grow materially it makes no sense for it to retain NZ Post - increasingly a beleaguered courier - as its parent.

Kiwibank has certainly made a big impact with the public since it launched in 2002 but largely only at the lower-value, retail end of the market.

Meanwhile, the Australian end of the banking sector has hardly been out of the headlines this year.

Advertisement
Advertise with NZME.

Whether we are dealing with leadership scandals, regulatory breaches or just the earnest and complex debate about capital ratios - 2019 has been a shocker.

Hopefully the big four Australian Banks will - as they've promised - lift their game in 2020.

Perhaps the tighter capital rules, a tougher regulatory environment and a genuine attitude shift from the leadership will quietly usher in an era of more moderate profits, and a more modest executive culture.

Or maybe that sentence would look better on a Tui beer billboard.

Regardless, the turmoil spilling across the Tasman has provided a reminder of just how imbalanced the New Zealand banking sector is.

Kiwibank still has a market share of not much more than 4 per cent by value of assets.

The more business-minded brains in this government must see that mixed-model ownership has proved to be an overwhelming success for every organisation it has been applied to.

Australian-owned banks are under scrutiny. Photo / File
Australian-owned banks are under scrutiny. Photo / File

Air New Zealand has thrived since the government took a controlling stake in 2001.

Port of Tauranga has thrived as a listed company, majority owned by the Bay of Plenty Regional council.

The listing and partial sell down of Meridian, Mighty River and Genesis raised five billion dollars in selling almost half of each these assets.

The remaining taxpayer-owned 50 per cent shareholdings now being worth more than the original 100 per cent shareholdings, presale.

More importantly, shareholder returns are 70 per cent higher than when the businesses were run as state-owned enterprises.

What could Kiwibank be worth?

Well, certainly more than $1 billion and probably more like $1.5b if it was listed on the stock exchange.

In September 2016, NZ Super paid $263 million to take a 25 per cent stake in Kiwi Group Holdings, while ACC has paid $231m for a 22 per cent stake.

The valuation done at the time valued Kiwibank at $1.1b.

A back-of-the-envelope valuation, using a PE (price to earnings) multiple based on similar other second-tier banks in Australia, would give it a value of up to $1.4b.

It would be a sizeable float by New Zealand standards, attracting plenty of investor attention.

A percentage could be set aside for local retail investors to ensure a high percentage of Kiwi uptake.

Once listed, Kiwibank could put the foot down on organic growth plans or it could raise capital to buy up some of the opposition - local minnows or potentially parts of the Aussie bank business.

Let's not forget that at least two of the big Australian banks this year threatened to retreat from parts of their New Zealand business if the Reserve Bank's new capital rules put too much of a dampener on their profits.

Were they serious? Probably not.

But if the heat stays on in Australia then we may see them look to streamline. There have already been some big sell downs of Asian assets by Australian banks.

And if they do decide to cut their losses then it makes sense for a New Zealand business to be ready step in.

Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Latest from Small Business

Premium
Business|small business

'Change their footprint': Kiwi start-up's plan to shave $1200 a year off household power bills

30 Jun 05:00 PM
Premium
Small Business

Small Business: Kiwi pickle brand processes 100 tonnes as business booms

29 Jun 05:00 PM
Premium
Small Business

On The Up: A royal new venture with King Bees Honey

22 Jun 05:00 PM

There’s more to Hawai‘i than beaches and buffets – here’s how to see it differently

sponsored
Advertisement
Advertise with NZME.

Latest from Small Business

Premium
'Change their footprint': Kiwi start-up's plan to shave $1200 a year off household power bills

'Change their footprint': Kiwi start-up's plan to shave $1200 a year off household power bills

30 Jun 05:00 PM

Basis plans to install over 50,000 smart panels globally in the next 24 months.

Premium
Small Business: Kiwi pickle brand processes 100 tonnes as business booms

Small Business: Kiwi pickle brand processes 100 tonnes as business booms

29 Jun 05:00 PM
Premium
On The Up: A royal new venture with King Bees Honey

On The Up: A royal new venture with King Bees Honey

22 Jun 05:00 PM
Premium
Controversial Kiwi start-up, once worth $38m, folds in New York

Controversial Kiwi start-up, once worth $38m, folds in New York

19 Jun 02:37 AM
From early mornings to easy living
sponsored

From early mornings to easy living

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP