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

mattwnz

20164 posts

Uber Geek

#2958391 23-Aug-2022 18:32

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.

I just wonder if it is a safer bank as a result of this?. Would the government now ever let depositors lose any saving in it?

tdgeek

29749 posts

Uber Geek

Trusted

Lifetime subscriber

#2958393 23-Aug-2022 18:37

mattwnz:

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 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.

Yes, that does sound correct. First point 20% definition. It probably is, but if its a stable market and drops 20% is a gulf different from a well overpriced market thats probably 40% excess dropping 20%.

For the FHB's that have to move, yes thats a problem. But if you buy at a bull market, thats their risk. Conversely, FHB buys in a rising market, and they have to move they may win, or at least break even. Same as the sharemarket, you take the risk. Harsh, maybe, but its reality. In context, those adversely affected are minimal. But they make the news.

tdgeek

29749 posts

Uber Geek

Trusted

Lifetime subscriber

#2958394 23-Aug-2022 18:43

mattwnz:

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?

"IF" Kiwibank operate for the people, they may be able to manage this, by virtue of past history, earnings. Its JUST a numbers game, as the person/couple. the house are unchanged. A regular bank (only shareholder focussed) may and would act different. So I go back to my personal theme, that KB may act as a baseline, thereby seeing other banks follow them. Same as if the Govt created a fuel provider or a grocery provider to sway the market. That wont happen, but it can with a bank, as they already own it

Handle9

11394 posts

Uber Geek

Trusted

Lifetime subscriber

#2959628 26-Aug-2022 07:12

networkn:
Sure, this year, I recall lots of losses in prior years

Which year are you referring to?

1 | 2 | 3