Kiwibank Secures Approval to Raise $500M to Compete with Big Aussie Banks

In a significant move to reshape New Zealand’s banking landscape, Finance Minister Nicola Willis announced that Kiwibank has received Cabinet approval to raise up to $500 million in new capital, paving the way for the state-owned bank to compete more aggressively with the big four Australian-owned banks—ANZ, ASB, BNZ, and Westpac—that currently dominate the local financial services sector.

This new capital-raising initiative, backed by market interest from domestic institutional investors, is being hailed as a pivotal first step in unlocking Kiwibank’s growth potential while preserving its strong New Zealand identity.

“Allowing Kiwibank to raise up to an additional $500 million is the first step towards giving Kiwibank access to the capital it needs to truly compete with the big four Aussie banks,” Willis said. “This ensures the bank remains owned by New Zealanders and operated with New Zealand’s interests at heart.”

Addressing a Lack of Competition in the Banking Sector

The announcement follows the Commerce Commission’s 2023 findings, which highlighted that the country's personal banking sector suffers from a lack of strong competition, leading to concerns about pricing, innovation, and customer choice.

According to Government advice, an infusion of $500 million in capital could support up to $4 billion in business lending or $10 billion in home loans, allowing Kiwibank to significantly expand its lending portfolio and customer base.

“This capital raise is not just about growing Kiwibank—it’s about increasing competitiveness across the entire banking sector to benefit Kiwi consumers and businesses,” said Willis.

Strong Local Interest from NZ Investors and Māori Institutions

The bank’s parent company, Kiwi Group Capital (KGC), conducted a market testing process, engaging with KiwiSaver funds, investment institutions, and professional investor groups, including Māori investment bodies.

KGC reported back to Cabinet that there was strong domestic interest in participating in the capital raise, allowing the Government to proceed without needing to look to offshore investors, thereby maintaining full local control.

“The Government has received assurance that New Zealand investors are ready to help grow Kiwibank,” Willis confirmed. “This is a vote of confidence in the bank’s future and its potential as a competitive force.”

Safeguards to Preserve Kiwibank’s New Zealand Identity

Despite speculation about the future of the bank, including a potential public listing, Willis assured the public that any such move would only occur with an electoral mandate. Until then, the Government has implemented protective measures to safeguard the bank’s identity and local focus.

These include:

• Maintaining at least 51% Government ownership of Kiwi Group Capital for the foreseeable future

• Creating a Kiwi Share, held by the Crown, that locks in key requirements such as:

  • Ensuring a majority of KGC’s directors reside in New Zealand

  • Keeping Kiwibank’s principal place of business in New Zealand

These governance protections aim to ensure Kiwibank continues to operate with a distinctly New Zealand focus, even as it grows its capacity and competitiveness.

Timeline and Next Steps

KGC has until 30 June 2026 to complete the capital raise. However, the process is still subject to final approval of terms and conditions by shareholding Ministers. This gives KGC flexibility in timing while maintaining accountability to public shareholders and governmental oversight.

The capital raise is expected to be a transformative moment for Kiwibank, potentially allowing it to serve more small businesses, offer more competitive home loans, and develop new financial products tailored to New Zealanders.

A Turning Point in New Zealand’s Banking Sector

This latest development signals the Government’s intent to foster a more competitive and consumer-focused banking environment, while leveraging a homegrown financial institution to do so.

By enhancing Kiwibank’s access to capital and reaffirming its public ownership and New Zealand-based governance, the Government hopes to break the longstanding dominance of the big four banks and provide genuine alternatives to Kiwi customers.

With increasing public scrutiny of bank profits and interest rate decisions, Kiwibank’s empowered growth could mark the beginning of a more diversified and responsive financial sector in New Zealand.