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New Zealand gov't bank sell-down sparks privatization fear

Xinhua, April 6, 2016 Adjust font size:

New Zealand's only state-owned bank is to get new shareholders under a proposal that has sparked concerns it could lead to privatization.

The government announced Wednesday that NZ Post, the state-owned mail service and parent of Kiwibank, could sell 45 percent of Kiwibank to two other government agencies: the Accident Compensation Corporation (ACC) insurer and the New Zealand Super Fund (NZSF), the state-owned pension fund.

"Kiwibank will remain 100-percent government-owned - that is a bottom-line," Finance Minister Bill English said in a statement.

"To ensure this occurs, the proposal includes a right of first refusal for the government over any future sale of shares which we would exercise."

State Owned Enterprises Minister Todd McClay said the proposal, which valued Kiwibank at 1.1 billion NZ dollars (0.75 billion U.S. dollars), could see benefits for Kiwibank, NZ Post, ACC, NZSF and taxpayers, but it needed to stack up for all parties before it proceeded.

"When NZ Post's chair Sir Michael Cullen approached ministers with the proposal, he explained it could give Kiwibank access to extra sources of capital for future growth and broaden its exposure to commercial expertise," McClay said in the statement.

"NZSF and ACC would have an investment in a profitable local company. NZ Post would receive a return for the shares, some of which would be used to repay debt built up to support Kiwibank's expansion and some would be paid to the government as a special dividend."

NZ Post, NZSF and ACC were currently in discussions over the details of the transaction and a final decision would be made later this financial year.

Kiwibank, which was launched in 2002 amid concerns that New Zealand's commercial banking sector had been largely sold into foreign hands and needed local competition, has been struggling to expand due to a lack of capital.

NZ Post has also seen revenues dwindle and is undergoing a major round of job cuts.

Unions and opposition lawmakers warned the move could be the first step in the privatization of both NZ Post and Kiwibank.

The opposition Green Party said the government's failure to inject capital in Kiwibank had forced NZ Post to take a step down the road to privatization of the bank.

"Bill English says he'll buy the Kiwibank shares back if he has to in five years, but he won't be Finance Minister then, so any promises he makes today are hollow," Green Party co-leader James Shaw said in a statement. Endit