The government has agreed to provide an uncalled capital facility to NZ Post to enable Kiwibank to continue its growth, Finance Minister Bill English said today.He said the move demonstrated the government's commitment to both NZ Post and Kiwibank.The NZ
The government has agreed to provide an uncalled capital facility to NZ Post to enable Kiwibank to continue its growth, Finance Minister Bill English said today.
He said the move demonstrated the government's commitment to both NZ Post and Kiwibank.
The NZ Post board had requested support to enable the company to preserve its credit rating, while Kiwibank continued its growth-focused business plan.
"We're confident this provision of uncalled capital, on commercial terms, will give NZ Post and Kiwibank the financial certainty they need to pursue their plans," Mr English said.
NZ Post will be able to call on the capital only in certain defined circumstances, such as Kiwibank experiencing a substantial shock event beyond its own resources and those of its parent.
The exact size of the facility will be reviewed over time in line with the needs of NZ Post.
NZ Post group chief executive Brian Roche has welcomed the decision.
Long term stability of NZ Post's AA- credit rating would enable Kiwibank to continue its growth strategy, he said.
"Kiwibank is vital part of the New Zealand Post Group," he said.
"The government's decision is a major boost in helping the bank retain a credit rating, which will enable it to continue to grow and expand its range of services to the market.
"Kiwibank is a remarkable success story, achieving over 700,000 customers in eight years, delivering quality straight-forward banking to New Zealanders.
"New Zealand Post Group wants to take Kiwibank go to the next level, expanding into new sectors such as business banking."
NZ Post did not require a direct capital injection from the government, he said.
Kiwibank had sufficient capital for immediate growth plans, helped by the raising of $150 million of tier one capital through a perpetual callable non-cumulative preference share issue earlier this year by Kiwi Capital Securities.
"What the uncalled capital does provide is the base for a stable credit rating from which New Zealand Post Group can launch ambitious and exciting growth plans for Kiwibank. That will be good for the group and all New Zealanders."
