Kiwibank says it won't continue with the settlement of a proposed $A175 million bond issue after the Reserve Bank said its bonds don't comply with Capital Adequacy Framework requirements.
The state-owned bank has been told the Reserve Bank has formed a preliminary view, which is yet to be finalised, about its tier 2 convertible subordinated bond, which was issued on June 6, 2014, and its additional tier 1 perpetual bond issued on May 27, 2015.
"The issue relates to a technical interpretation matter and in Kiwibank's view does not in any way affect the quality of the capital represented by the Kiwibank bonds," the Wellington-based company says. "Kiwibank is working urgently to resolve the issues with the Reserve Bank."
Kiwibank says it has the support of shareholders NZ Post, the New Zealand Superannuation Fund and the Accident Compensation Corporation following the Reserve Bank announcement.
"The Reserve Bank preliminary decision does not in any way impact the growth opportunities of the bank and all shareholders continue to support those opportunities," head of funding Geoff Martin says. "In the event that the Reserve Bank determines that the issuances to Kiwi Capital Funding Limited (KCFL) are not fully compliant, the shareholders will ensure that the bank will be in no worse capital position than if the Reserve Bank had not changed the treatment of the capital."
The central bank last week announced plans to review the definition of bank capital, the measurement of risks that the banks face and the minimum capital requirements and buffers to set up a regime that provides confidence in the banking sector.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- Investment adviser accuses ASB of giving inappropriate advice
- Evolve CEO Mark Finlay exits after $4.2m loss
- NZX, ASX technology companies equally dismal for boardroom diversity
- Change in govt blamed for investment firm pulling out of Precinct lease
- Record profit for F&P, forecasts higher again this year
Most listened to
- Adviser Brent Sheather on what he sees as ASB's inappropriate investment advice
- Craigs' Mark Lister on the Financial Stability Report and business confidence
- Mint chief executive Will Barker explains his plans for the business
- Tim Hunter decries Auckland Council's case for a new covered stadium
- NBR Radio: The best interviews – updated daily, with Grant Walker