NZ government acquires 100% of Kiwibank

Please note this sub-forum does not provide professional finance advice. You should seek advice from a licensed financial advisor.

To post in this sub-forum you must have made 100 posts or have Trust status or have completed our ID Verification.

If investing please consider our affiliate link for new accounts: Sharesies.

Forums › Finance and wealth management › NZ government acquires 100% of Kiwibank

1 | 2 | 3

1726 posts

Uber Geek

ID Verified

Lifetime subscriber

#2957875 22-Aug-2022 15:55

old3eyes:

I always thought in a round about way they owned 100% of it anyway.

You were right

Kiwibank has always been indirectly owned by the NZ Government.
Initially it was a subsidiary of NZ Post, then Post partly sold down its ownership to ACC & the Cullen Fund: still 100% indirect NZ Government ownership.
Now it's a stand-alone State Owned Enterprise, still 100% NZ Government owned, but more directly so

"Nothing to see here, move along please"

Earbanean

937 posts

Ultimate Geek

#2957877 22-Aug-2022 16:00

kobiak:

Bring on:
- state owned bank
- state owned gas/oil/coal production
- state owned building material manufacturing
- state owned farms
- state owned labour provider
- ...
- profit! now time to fight socialism :D

For god's sake, the state has always owned Kiwibank - right from day 1. The only diff is that the ownership has been via various combinations including NZ Post, Super Fund and ACC. But they are all wholly state owned. Basically you're 20 years too late with your outrage.

PolicyGuy

1726 posts

Uber Geek

ID Verified

Lifetime subscriber

#2957883 22-Aug-2022 16:09

Scott3:

Hopefully this enables kiwibank to expand their offering to such a level that they can provide banking services to the government.

A little embarrassing that the government own's a retail bank, but not one that that is good enough to use itself.

I say this as a customer of kiwibank for daily stuff many year's (but who still has to break out my childhood westpac account for some morr complex stuff, and I handle my share's elsewhere)

Yes, NZ Government banking has been an effective Westpac monopoly for decades, I think the first time it went to any kind of competitive tender was maybe around 2015.

If I was Treasurer, I'd direct a range of smaller government agencies to move their business to NZ-owned banks, and provide Kiwibank with the necessary capital so that it will be able to offer the services needed. Every couple of years, I'd lift the ceiling so that larger and larger government agencies had to use NZ-owned banks, until after between five and ten years, all NZ Government agencies would bank exclusively with NZ-owned banks. More importantly, all the fees would be earned by New Zealanders and all the profits paid via dividends to locals rather than to the Big Four Australian banks

mattwnz

20155 posts

Uber Geek

#2957884 22-Aug-2022 16:09

networkn:

Scott3:

Hopefully this enables kiwibank to expand their offering to such a level that they can provide banking services to the government.

A little embarrassing that the government own's a retail bank, but not one that that is good enough to use itself.

I say this as a customer of kiwibank for daily stuff many year's (but who still has to break out my childhood westpac account for some morr complex stuff, and I handle my share's elsewhere)

As someone who has banked with them personally and professionally, since near the start of the enterprise, it totally scares the pants off me that the Government would use them right now for any financial services. They lack the maturity of the bigger banks, and whilst it's possible they could get there, it would take quite a lot of work for them to be up with the other trading banks.

Are you talking about customer services, because some of the big banks are appalling. Its seems normal for hour hold times with some of the big banks.

tdgeek

29746 posts

Uber Geek

Trusted

Lifetime subscriber

#2957894 22-Aug-2022 16:37

It’s a means to provide competitive interest rates. That other banks would need to follow. That’s a lot more value to the business and residential economy.

networkn

Networkn
32351 posts

Uber Geek

ID Verified

Trusted

Lifetime subscriber

#2957897 22-Aug-2022 16:40

tdgeek: It’s a means to provide competitive interest rates. That other banks would need to follow. That’s a lot more value to the business and residential economy.

It's been a few years since KB has promised to have the lowest interest rates in the country, which was a big selling point at the start.

In some instances in the last couple of years when we consider switching away due to multiple issues with service, we were able to get offers from other banks at .75% cheaper.

mattwnz

20155 posts

Uber Geek

#2957899 22-Aug-2022 17:01

networkn:

tdgeek: It’s a means to provide competitive interest rates. That other banks would need to follow. That’s a lot more value to the business and residential economy.

It's been a few years since KB has promised to have the lowest interest rates in the country, which was a big selling point at the start.

In some instances in the last couple of years when we consider switching away due to multiple issues with service, we were able to get offers from other banks at .75% cheaper.

It works both ways though. They currently have some of the best savings interest rates if you compare their 3.25% notice saver rate for 90 days. No other banks compare currently, even the second tier ones.

Equinox IT

Cloud spending continues to surge globally, but most organisations haven’t made the changes necessary to maximise the value and cost-efficiency benefits of their cloud investments. Download the whitepaper From Overspend to Advantage now.

tdgeek

29746 posts

Uber Geek

Trusted

Lifetime subscriber

#2957902 22-Aug-2022 17:17

Interest rates now are more of a hot potato than they have ever been. KB can forego profits more than anyone else. Should they do that to shove others down it will make a difference.

If that is not one the considerations then the thread can be closed IMO. As it’s just bookkeeping

mattwnz

20155 posts

Uber Geek

#2957912 22-Aug-2022 18:22

tdgeek: Interest rates now are more of a hot potato than they have ever been. KB can forego profits more than anyone else. Should they do that to shove others down it will make a difference.

Apparently they are going to put all the profits back into growing it, which is unlike other banks where the profits go to shareholders etc. KB does need a lot of money investing in it. I suspect that National may try and sell of 49% like they did with the power companies, and this move may make it easier to sell off 49%, as it has simplified the ownership.

antonknee

1133 posts

Uber Geek

#2957913 22-Aug-2022 18:29

tdgeek: It’s a means to provide competitive interest rates. That other banks would need to follow. That’s a lot more value to the business and residential economy.

So you think the government might take a proactive approach with Kiwibank now it’s a direct SOE?

Set a challenge or bar as far as products/rates go, in order to drive other banks to match/beat that bar - therefore improving things for every consumer.

tdgeek

29746 posts

Uber Geek

Trusted

Lifetime subscriber

#2957914 22-Aug-2022 18:56

antonknee:
tdgeek: It’s a means to provide competitive interest rates. That other banks would need to follow. That’s a lot more value to the business and residential economy.

So you think the government might take a proactive approach with Kiwibank now it’s a direct SOE?

Set a challenge or bar as far as products/rates go, in order to drive other banks to match/beat that bar - therefore improving things for every consumer.

That’s my feel. They aren’t buying a bank they already own it. Unlike fuel or groceries, Kiwibank has the power to influence the market. Keep it honest.

mattwnz

20155 posts

Uber Geek

#2957915 22-Aug-2022 18:58

My main concern with Kiwibank is that it appears most of their business is in home lending. So if we get a housing price crash (20% or more in price fall from peak), which now seems possible, I do wonder how that may affect it.

tdgeek

29746 posts

Uber Geek

Trusted

Lifetime subscriber

#2957922 22-Aug-2022 20:01

mattwnz:
My main concern with Kiwibank is that it appears most of their business is in home lending. So if we get a housing price crash (20% or more in price fall from peak), which now seems possible, I do wonder how that may affect it.

Based on the base level 20% is more a correction than a crash IMO. If they keep interest rates a little lower then that would help the “crash” as would a few more buyers pulling the trigger.

kobiak

1615 posts

Uber Geek

Trusted

#2957930 22-Aug-2022 21:15

Earbanean:

For god's sake, the state has always owned Kiwibank - right from day 1. The only diff is that the ownership has been via various combinations including NZ Post, Super Fund and ACC. But they are all wholly state owned. Basically you're 20 years too late with your outrage.

Outrage? quite opposite. can't wait for more state owned assets to build state's wealth apart from taxes and shares. especially if it would take ownership of the "power" resources and build a community wealth on that. But hey, socialism right? we are so against it :)

anyway does not relate to the topic as much.

helping others at evgenyk.nz

mattwnz

20155 posts

Uber Geek

#2958388 23-Aug-2022 18:29

tdgeek:
mattwnz:

My main concern with Kiwibank is that it appears most of their business is in home lending. So if we get a housing price crash (20% or more in price fall from peak), which now seems possible, I do wonder how that may affect it.

Based on the base level 20% is more a correction than a crash IMO. If they keep interest rates a little lower then that would help the “crash” as would a few more buyers pulling the trigger.

20% seems to be the definition that I have heard several experts use for a house price crash in NZ. This page from a few years ago says that a 20% price drop is unlikely and would need a major banking event to cause it https://www.oneroof.co.nz/news/ashley-church-this-is-what-a-house-price-crash-would-do-to-nz-36304

But from what I have heard, if a FHBs new house (if purchased at the peak) drops 20% they could be in big trouble as it potentially could prevent them moving, as basically their 20% deposit / equity in the house disappears. So if they were to buy a new one they may have no equity to put down a new deposit to buy. So even though they are buying and selling in the same market, they potentially lose their equity, as the amount they owe is the same as the house is worth if they drop by the same amount as their equity. Does this sound correct? It wasn't something I had thought of until I heard someone discussing it.
But I do wonder how banks like Kiwibank are going to handle things if people do end up in negative equity, and wonder if this is partly why the government has done this, due to the banks exposure to property lending?

1 | 2 | 3