Govt tips in a further $225m of capital into Kiwibank

Chair of the latter, David McLean, says in a statement that the investment “represents the next step in the strategic portfolio reshaping actions taken by the owners of Kiwibank over the past year – namely, divesting Kiwi Wealth and Kiwi Insurance to focus on its core banking business.”

It has been obvious for quite some time that Kiwibank needed more capital. It is the least capitalised of all New Zealand's registered banks with common equity tier 1 (CET1) capital of 10.4% of risk-weighted assets at March 31. It has seven years from July 1 last year to lift that to at least 14%.

The statement didn't say what the capital injection takes Kiwibank's CET1 ratio to.

“This investment generates long-term value for shareholders and is well-aligned with KGC's strategic objective to help Kiwibank provide a competitive banking alternative for New Zealanders,” says McLean, Westpac's former chief executive and also chair of the government-owned Kiwirail.