Big capital injection for KiwiBank

The government will allow Kiwibank to seek a $500 million capital injection to boost its ability to act as a ‘disruptor’ to compete with the Australian-owned ‘big four’, Finance Minister Nicola Willis says.

Willis said Kiwibank’s parent company Kiwi Group Capital and Treasury officials would discuss raising the capital with domestically based KiwiSaver funds, investment institutions and professional investor groups.

She said backing Kiwibank was a key part of the government’s plans to increase competition between ANZ, ASB, BNZ and Westpac.  “New Zealand is often seen as the little brother against the Aussies. We’re trying to give that little brother a little bit more muscle to get a fairer deal for Kiwis,” she said.

Willis also sent a formal Letter of Expectation to the Reserve Bank, telling it to place greater emphasis on banking competition in its policy settings.