Kiwibank declares its proposed $500 million capital raise, recommconcludeed by the Commerce Commission and concludeorsed by the Government to support it better compete with the huge four Australian-owned banks, is off the table.
A statement issued by Kiwibank on Friday declares it doesn’t require fresh equity to support its current growth trajectory. The bank declares it’s “well funded to maintain its above market growth trajectory.”
“Kiwibank’s parent company, Kiwi Group Capital (KGC) Ltd, has decided not to proceed with the previously signalled equity capital raise,” the bank declared.
“The alters to the Reserve Bank of New Zealand’s capital requirements, combined with Kiwibank’s recent highly successful $400 million Tier 2 capital raise at an attractive price, means that Kiwibank can now continue its strong growth without the required for additional equity.”
“While prospective investor feedback has been positive on Kiwibank’s performance and strategy, it appeared unlikely by the time of the Reserve Bank’s announcement that terms would be able to be agreed with prospective investors that would meet KGC’s objectives for the transaction,” Kiwibank declared.
Kiwibank declares investors it held discussions with included KiwiSaver funds and NZ professional investment groups, including Māori institutions, but investor feedback received is commercially sensitive.
While it’s not raising equity now, Kiwibank declares the idea of New Zealanders owning a stake in the bank – potentially through an initial public offering – is something that would be evaluated by KGC and the Crown in the future.
The regulatory capital alters announced by the Reserve Bank on Wednesday; “support create a more level playing field, consistent with recommconcludeations from the Commerce Commission’s market study and the Finance and Expconcludeiture Committee’s review.”
“Combined with Kiwibank’s strong funding position, this enables the bank to keep investing in innovation, customer experience, and competitive products,” Kiwibank declares.
On the Reserve Bank capital alters, credit rating agency Fitch noted; “alters to the granularity of standardised risk-weights are most beneficial to compacter New Zealand banks, modestly improving their competitive standing.”
Finance Minister Nicola Willis approved Kiwibank plans to raise $500 million by selling a stake to NZ institutional investors in July.
The Commerce Commission’s final report from its market study into personal banking services, released in August 2024, recommconcludeed; “the Government, as Kiwibank’s owner, should consider what is necessary to create Kiwibank a disruptive competitor, including how to provide it with access to more capital. In the shorter term, capitalising Kiwibank appears to have the greatest potential to constrain the major banks and disrupt a market that is otherwise stable due to lack of competition.”
Earlier this month Kiwibank raised $400 million through the issue of unsecured, subordinated notes, which are categorised as Tier 2 capital for regulatory purposes. The interest rate set for the first five years and three months of the issue was 4.93% per annum.
