Government uncalled capital decision boost for Kiwibank
Wednesday 18 August 2010, 9:35AM
By New Zealand Post Group
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New Zealand Post Group CEO Brian Roche has welcomed the Government's decision to provide uncalled capital support on commercial terms to the Group in order to provide credit rating support. Long term stability of New Zealand Post's AA- credit rating will enable Kiwibank to continue its successful growth strategy.
"Kiwibank is vital part of the New Zealand Post Group. 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," said Mr Roche.
New Zealand Post Group did not require a direct capital injection from the Government. Kiwibank has sufficient capital for immediate growth plans, aided by the raising of NZ$150 million of tier 1 capital through a perpetual callable non-cumulative preference share issue earlier this year by Kiwi Capital Securities Ltd.
Mr Roche said the uncalled capital could only be utilised as protection against a significant unforeseen external event, and was not available to fund growth activities or support deterioration of earnings in regular business.
"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," said Mr Roche.
The Government and New Zealand Post Group are in the final stages of finalising the terms and conditions under which the facility will be provided. A further announcement on these details will be made once they are available.