Kiwibank's CEO has revealed what the Government purchasing the bank means for consumers.
On Monday it was revealed the Crown is buying Kiwi Group Holdings, the company that owns Kiwibank, from the Superannuation Fund, ACC and NZ Post.
The exact price hasn't been disclosed but the Super Fund was paid $527 million for its 25 percent stake suggesting the total price could be about $2.1 billion.
Speaking with AM on Tuesday the bank's CEO Steve Jurkovich said having one owner will give it more room to grow.
"Ultimately one of the challenges was that our majority owner, at 53 percent, was NZ Post - which has got really significant challenges on their hands," Jurkovich said.
"They've got a really fast-growing parcel business and it's tough going in the mail business so when we go and look for capital to grow - because banks are always balancing how much they earn versus how much they spend… NZ post and the shareholders, that was challenging for us in terms of how we grow. Now we've got one owner, I'm not saying it's going to be simple but it is one owner and the board has a clearer focus to figure out how fast it wants to grow."
But Jurkovich said the bank won't be expecting bundles of cash from the Government.
"We had record profit last year, the retained earnings, so the profits we make go back into the business and allow us to grow and we've also been really heavily investing in technology."
He said the bank can keep going at its planned rate of growth for at least the next five years but if the Government wanted it to be faster - it would have to stump up some money.
Jurkovich also revealed the Government buying the bank won't mean more brick-and-mortar stores because they already have quite a few compared to other banks.
The bank, which was founded in 2002, was originally owned by NZ Post but it sold minority stakes to the Super Fund and ACC in 2016 to ease financial pressure.
Finance Minister Grant Robertson told media on Monday the Government's purchase is a transfer of assets and the overall value of the Crown's balance sheet won't change.
But he said the Government will have to fund its contribution for the bank through a multi-year capital alliance, which has already been factored into this year's Budget.
"The new ownership structure simplifies our ability to fully support Kiwibank to meet its future potential."
"The government is fully committed to supporting Kiwibank to be a genuine competitor in the banking industry - ensuring the bank has access to capital to continue to grow on a commercially sustainable basis and offer a viable and competitive alternative for New Zealanders," Robertson said.
Prime Minister Jacinda Ardern called the purchase exciting and reassuring during her post-Cabinet press conference on Monday.
"Not only will this safeguard all future profits to stay in the country - unlike the Australian-owned banks - it will also continue to enhance competition in the banking sector," the Prime Minister said.
"The government is fully committed to ensuring Kiwibank is supported to meet its full potential and that includes ensuring access to capital, so the bank can be a genuine and credible competitor ... which operates independently of the government but that is able to compete on a level playing field with the big Aussie operators."
