You are currently viewing Kiwibank Cleared to Raise NZ$500 Million to Boost Lending Growth

Kiwibank Cleared to Raise NZ$500 Million to Boost Lending Growth

Prime Highlights

  • The owner of Kiwibank has been allowed to raise as much as NZ$500 million in private capital placements.
  • The action is to increase competition in banking and business and home lending.

Key Fact

  • The raising of capital could fund NZ$4 billion of business loans and NZ$10 billion of mortgages.
  • Final approval will be needed from ministers, with raising to finish by June 2026.

Key Background

Major shareholder of Kiwibank Kiwi Group Capital (KGC) has been approved by Cabinet to raise NZ$500 million or more of capital through private placements. The capital raising is from local institutional investors, KiwiSaver providers, and Māori investment institutions. This follows extensive market testing that established robust investor demand.

The new capital will allow Kiwibank to increase its lending capacity considerably, estimated at lending NZ$4 billion in business loans and NZ$10 billion in residential mortgages. The growth is intended to make Kiwibank a more serious contender against the big four Australian-owned banks and at the same time maintain its New Zealand identity.

Finance Minister Nicola Willis added that the government’s intention is to add competition in banking while keeping Kiwibank majority owned by New Zealanders. To do this, strict conditions have been set: KGC has to retain at least 51% Crown ownership, individual investors will be limited to holding no more than 20%, and the bank will still have to be based and headquartered in New Zealand. Also, Kiwibank’s name and core business will be domestic.

Proceeds from the funds raised will be reinvested into banking growth with no payment to the Crown. Listing on the public market is not anticipated current government, and any future listing will necessitate a public mandate. Future IPO plans have also been made subject to finalising Kiwibank’s digital upgrade, scheduled for around 2028.

As other investors remain guarded with few structural details and delayed IPO schedule, this approval to raise capital is a positive move towards building greater competition in New Zealand’s banking sector and cementing Kiwibank’s long-term lending and expansion strategy.

Read Also : Soviet-Era An-24 Aircraft Crashes in Russia’s Far East