The locally-owned bank is looking to significantly increase its scale
Kiwibank may need to acquire a ‘big four’ competitor to increase its scale, with rumours circulating that a BNZ acquisition could be in the pipeline.
According to Stuff, the locally-owned bank may be looking to acquire BNZ, but has chosen not to comment on market speculation. Simplicity founder Sam Stubbs says the acquisition would be a “logical move” for Kiwibank, which currently holds only 5% of New Zealand’s banking market.
Kiwibank signed off on a growth-focused business plan in August 2019, with CEO Steve Jurkovich saying he wants to be a “credible alternative” to the major Australian banks.
Stubbs says that BNZ’s parent National Australia Bank is one of the “more stressed” banks as it deals with tighter margins, increasing compliance costs and the Reserve Bank’s new capital requirements. However, the Reserve Bank is allowing banks to raise up to $9 billion of the total capital through redeemable preference shares, a major compromise which means banks would be less likely to pull out.
“Would they sell a crown jewel to fund themselves out of that?” Stubbs said. “They could but it would be a strange transaction."
Massey University banking expert Claire Matthews agrees that such a purchase would be a quick way for Kiwibank to drive its growth, but the transaction would require a lot of funding.
"Purchasing one of the big four banks would be a relatively easy way for Kiwibank to grow and be able to operate as a full-service commercial bank, rather than the more limited retail bank that it currently is, and also be better positioned to be able to take over the government banking from Westpac,” Matthews said.
"However, I would wonder where the funding would come from, because it would require a lot of capital. And I would expect to see changes to management and governance at Kiwibank, given the different scale and nature of operations at BNZ."
