New Zealand government-owned Kiwibank to raise up $298 million

By Renju Jose and Lucy Craymer

WELLINGTON (Reuters) -New Zealand has approved government-owned Kiwibank's parent company raising up to NZ$500 million ($298 million) as it looks to compete with Australian banks that dominate its banking sector, Finance Minister Nicola Willis said on Wednesday.

"(This) is the first step towards giving Kiwibank access to the capital it needs to truly compete with the big four Aussie banks while retaining its intrinsic New Zealand identity," Willis said in a statement.

Kiwibank is New Zealand's fifth largest bank, with the four largest banks all Australian owned. In August 2024, following a review of the sector, New Zealand's competition watchdog suggested that capitalising Kiwibank could provide the sector with a disruptor, which could improve competition.

Willis said that advice she had received was that an NZ$500 million of capital could support up to NZ$4 billion of business lending or NZ$10 billion of home lending.

Kiwibank parent company Kiwi Group Capital had advised there is sufficient interest from professional New Zealand investor groups to proceed and has until June 2026 to complete a capital raise, the statement said.

Willis added that a future government may choose to publicly list Kiwibank on the stock exchange but that will not occur without an electoral mandate.

Kiwibank was established in 2001 and has a market share of around 9%. The government has introduced a number of measures to safeguard the bank as New Zealand-owned and operated including a requirement that government maintain a 51% stake in the bank and retain New Zealand as its principal place of business.

($1 = 1.6790 New Zealand dollars)

(Reporting by Renju Jose in Sydney; Editing by Leslie Adler and Lincoln Feast.)