Unpacking the Kiwibank sale

The National Government surprised almost everyone this week by announcing that NZ Post, which owns 100 percent of Kiwibank, is likely to sell 25 percent of its Kiwibank shares to the Superannuation Fund and 20 percent to the ACC Fund.

This comes shortly after the Green Party launched a new policy to strengthen Kiwibank so it can compete better with the big Aussie banks. Our policy would drive competition in the banking sector that would lead to lower fees and better rates for all customers of all banks.

It also comes just a week after Metiria Turei got Finance Minister Bill English to rule out privatising Kiwibank or selling it to overseas investors. Technically, this won’t be a privatisation, because the Super Fund and the ACC Fund are public investment funds (they look after the money that people get their pension and ACC payments from).

But is it a step down the road to privatisation?

It’s no secret that Bill English would like to privatise Kiwibank: he was caught on tape in 2008 saying so. So our initial reaction was that this was the first step towards privatisation.

It will be easier for the Super Fund and the ACC Fund to sell off their shares in Kiwibank than it would have been for the government to privatise the bank. These funds’ decisions aren’t made by ministers, whereas with 100 percent Government ownership ultimately any decision to privatise Kiwibank would have been made around the Cabinet table.

Part of the deal will be that ACC and the Super Fund can’t sell their shares for at least five years though. After five years, the Government will have the have the first right to buy back Kiwibank shares if the Super Fund and ACC want to sell them. And Bill English has promised to exercise that right if it comes down to it.

But Bill English almost certainly won’t be the Finance Minister in five years’ time. Labour and the Greens have both promised we’d buy Kiwibank back if there’s a threat of it being privatised. But who knows what a future National Government might do?

What will it cost to buy the shares back?

That’s the billion dollar question. NZ Post will get about $495 million for selling Kiwibank shares. But we’ve done the numbers and if Kiwibank keeps growing the way it has in the past (and we hope it does), then those shares will be worth between $800 million and $1.1 billion in five years’ time.

So basically selling 45 percent of Kiwibank for $495 million today could mean buying it back in five years for double that amount.

Sounds like the worst pawn-shop deal ever.

Will it really help Kiwibank?

Probably not. Kiwibank’s problem is that it needs capital to grow, so it can compete with the big Aussie banks. The Government’s new plan won’t actually see Kiwibank get any new capital right now.

The proceeds from the share sale will go to NZ Post, and NZ Post will give most of them back to the Government as a special dividend. If Kiwibank wants more capital, it’ll need to ask for some from its new shareholders, the ACC and Super funds.

Will it fix NZ Post?

NZ Post made big changes recently which were supposed to put it on a sustainable footing, including moving to three-day a week deliveries. But those changes don’t seem to have fixed the underlying problem, which is declining mail volumes meaning less revenue.

The Kiwibank share sale is likely to result in some extra capital for NZ Post, meaning NZ Post won’t need a bail-out anytime soon – but at the expense of Kiwibank’s ownership.

What does it mean for Kiwibank customers?

Not much. There is some technical stuff around deposit guarantees that will change, but day-to-day, we won’t notice any difference.

So why have the Greens been making a big deal about this?

Because we think Kiwibank is worth making a fuss about.

Our banking sector is dominated by big foreign banks, who last year sent about $5 billion in profits back to their owners overseas. Kiwibank was originally started with the goal of serving the public interest: to offer low fee, accessible banking to everyday New Zealanders and compete in an uncompetitive banking market.

At that time, the big Aussie banks were buying up their competitors, closing branches down, and charging ridiculous fees like $1 every time you wanted to deposit your own money in your own account. Kiwibank changed all that by offering a better deal, and forcing the big Aussie banks to offer better deals in response.

It could do all this because it wasn’t just another big overseas bank trying to make a profit, it was a New Zealand-owned bank that was given freedom by the Government to serve a public purpose.

If one day Kiwibank gets privatised, the timeline leading up to that privatisation will start this week.

 

13 Comments Posted

  1. Things are moving fast. We can be bold on Sovereign Money now. The cabal are seriously on the back foot. China/BRICS are set to take control of global currency. Russia has kicked the banks out, showing it can be done. Austria publicly talk of very strong cooperation with Russia, and Hungary, Italy, and Germany all active to start Europe trading with Russia using the new payment system. Iran is pumping free again… Germany is now equally aligned between East and West, with NATO broken. I wouldn’t be surprised if the cabal have also lost control of haarp. Shanghai in 2015 was the last haarp attack I remember. That port explosion in China might have been their last tech bullet. The cabal “terror attacks” in Brussels is their end game strategy. As the empire collapses, the methods used on the outer, come back to the inner. Shame on RNZ of not pointing out the b-grade acting. All the US president candidates are actors, even Bernie, doesn’t mention the military industrial complex. The US is under martial law. Think it’s now run by a mix of Zionic UN boys, Lodge appointed to the Pentagon. But the political killing have all but stopped. It’s mainly them killing their own at the moment. Lots of “banker suicides” as dark knights cover their tracks. Hey, if another of ours falls Rob Donald style, it wont be just my sword they have to worry about. Fear porn is the best they can do at the moment. Too little, too late, people power has arrived.

    NZ Greens have lots of political capital at the moment. Education on “debt-based money-creation for private-profit” would be an ecologically wise way to use that trust. Lets be honest, more Green MPs would be nice, (to replace our assassinated 😉 but we’re a better opposition party than a govt member.

    Honesty suits the Greens. The Greens may do better to keep out of the next govt, could be a messy three years, watching the old guard fall on their own swords. Perhaps we join govt mid-term 🙂

  2. The five US Presidents that set policies for state issuing /printing money or wrestling some control back from the banks. were all shot. Two survived, heeded the “warning”, and modify their policies.

    A public ground swell is needed against banks robbing money and assets out of the system and their opposing state moves to take back control of money. A leader alone is very vulnerable. Public good should be the driving aim not wealth accumulation for an “elite” by capturing the money system and

    The state should assume it former role of being the preferred source of advances and loans.

    Our laws may modify the processes for bankers to control money but as our deposits are loaned off shore each night, the murky track of what takes place in banking is a black hole as far as information is concerned. The best assets held by banks against loans have been ring fenced so they are not available if banks liquidate. Those assets will stay in off shore control.
    A loophole in the laws allowed this, and the present NACT Govt ignored the expert testimony of academic leaders and ratified the bankers asset booty. Many other countries legislated to control such corruption of the system.

    As banks continue to expand their asset accumulation converting money gathered into businesses, property and other harvesting ventures, a growing inequality sees a tiny group owning the major part of our wealth.

    Legislation has been passed to use your deposits to bail out the banks if they over play their hand in their gambling / conversion to asset activities and crash. A bank crash becomes another grab of the public’s assets and money.

    The basis of banking is untenable.
    Legally a bank can create loans that are 9 times as large as deposits held. When the loans are repaid with interest then Profits are enormous but well entangled with complex international transactions, liabilities, pseudo liabilities and tax havens.

    Those lending limits are not observed nor policed.

    No other sector of our society is allowed to accumulate wealth and power in this way.

    They control Govts and can pressure countries to adopt policies and actions to suit bankers greed. Banking is an international cartel. Small states rebelling are brought into line and if necessary invaded. Large states are run by bankers.

    We have one as an MP and so does Australia. Corrupt lying puppets. The nations debt to banks grows.

    You may remember Russell Norman suggesting a degree of QE by the state and he was accused of being a communist, a loony and incompetent. The pressure put on him out of the public eye had its toll.

    Meanwhile Private banks issue money daily unquestioned.

  3. Fixing global tax holes would be great, but it’s not the game changer. These companies currently have no profit, so the debate is really around insolvency laws and Sovereign Money strategy, but the media always keep the subject one behind the 8 ball.

    Panama Papers was just the outer-circle, exposed. Inner-circle exposure, coming soon.

    As a medium-term loan for Sovereign Money we should look at the value of buying BNZ (at post-crash-price).
    State housing as a long term investment.
    And UBI on a short term loan, to be paid back in a few years once tax is reformed (flat tax plus capital tax).
    Small interest free loans could also be made, on a 10 year payback, gaining credit rating.

    That’s a starting point, for financial reform to escape the debt crisis. Plus transactions taxes to avoid exchange rate speculation, and commodity indexing for direct payment to other central banks, or as required.

  4. With the latest Panama papers discussion and this article I saw on the standard it is a call to action and Peter Dunn and the Maori Parties are the unknown quantities but it must be an issue of confidence so lets collectively tell them – the line in the sand.

    http://thestandard.org.nz/whitewash-a-certainty-in-tax-haven-review/#comment-1159854

    If we expect there is public infrastructure for our convenience and well being then we must expect to pay for that. We have to define what this security is and look at what might change that security. One thing we should have learned, that equality and health issues we collectively agree with in democratic processes has been a very peaceful way of doing things. What has been inflicted on the Middle East in the name of fuel security was for a system that is proving to be unsustainable and damaging everyones possibility of survival. The companies that have profited in that have a moral obligation to be part of the community that has to fix it.

    What we need to do is start taxing the damage by putting a price on the pollution ie carbon tax, royalties on chemicals to go into the environment, and scarcer resources need to be taxed for the good of the nest generation or we aren’t even seeing our own humanity.

    Leave the income tax rates where they are, remove GST on the poor to boost the spending we do need around our children, Make rates tax deductible but put the public welfare services in Regional Council hands and put the social taxes on the common resources, land being the significant one. This means the availability of land by downsizing, is stimulated by increasing social pressure needing greater funding, falling on the better sharing of the commons. Rates and royalties are an ongoing right to use but the public has the right to fairly redistribute that right.

    Any thing other than this is suicidal for future generations.

    We have to deal with climate change and here is a staring point for our democracy.

    All the elements for this policy are in place but the chains of command go to the appropriate bodies for impementation. It automatically gives a two tier government by strengthening local communities around their services.

    Government services should be used to publicly analyse options raised in good public discussion and the internet gives us a tool that is already set up in many government departments. The good ideas will emerge and this can be counted as already is in Facebook.

    Surely parties can align on this common ideal and I am sure local body resources can also be added.

  5. Mostly agreeing Mike, but to be fair, all banks are in this difficult position, and Kiwibank has a better business model than the Ozzie big four. NZ Post should be happy to keep Kiwibank. (Savings schemes for retirement are too market directed. Unless ACC and Superfund are also going to buy into the big four Ozzie banks, using Sovereign Money 😉

    If that few hundred million dollars is basically used to service debt, then I can’t support the deal. Only if we are paying ourselves and not exporting that money to the big four Ozzie banks.

    However, this correspondence from a World Bank lawyer shows that we might both be winners.

    https://s3.amazonaws.com/khudes/lspringmeetings.pdf

    The Network of Global Corporate Control is in receivership to the World Banks with ownership according to Bretton Woods membership.

    But if those banks and corporates do belong to us again, then we should have a say in how they are run. Guess this will take time on the legal side.

    One faction of the World Bank has a return-to-gold-standard deal signed. I can believe this is the safest way forward, till the world understands commodity banking again. Find the ecological wisdom to remove the growth requirement.

    Agreed, that they are trying to privatise Kiwibank, but looks like they will lose power before they get far. They seem to be acting, time for end game.

  6. Wow, National Radio just now. JohnKey spoke sooooo bad. Greens look on track to take govt with Labour as junor partner.

    When all this is over, we could have BNZ back in state control. Then I would be flexible on this kiwibank sale to acc etc.

  7. Just keep in mind that as gullible Kiwis we really have to trust “the smiling assassin” who got that name from his peers in the incomparably corrupt FOREX markets. 🙂

    We probably have favored nation status with all our internet friends with big inheritance money to transfer too…. 🙂

  8. The Network of Global Corporate Control by S. Vitali, J.B. Glattfelder, and S. Battiston
    This research publication show how the world is economically controlled by a small group of people.
    http://arxiv.org/PS_cache/arxiv/pdf/1107/1107.5728v2.pdf

    Oxfam offering the Ozzie banks advice.
    https://www.oxfam.org.au/wp-content/uploads/2015/09/2015-66-no-excuses-investor-briefing-report.pdf

    Australian housing bubble ready to burst. (Though this source does sometimes spread CIA sponsored propaganda – says Hudes, World Bank, 2016) But surely our Ozzie banks and all about to fall, unless the Global Debt Facility can be recognised, and used. Or other such system change. But humanities gold will need to be used as gold currency, not as gold bonds.
    http://www.zerohedge.com/news/2016-02-24/new-big-short-australias-housing-bubble-grip-insanity

    The Global Debt Facility is a World Bank fund with astronomical amounts of gold from the end of WW2.
    This is the most realistic way to rebuild a financial system once the banks have fallen.
    Bill English is supposed to have signed this agreement, now we’re waiting for the corrupt inner-circle of NWO to loose power.
    http://www.globaldebtfacility.com/

    Propaganda claiming a world currency will replace the USD in 2018. This is what we will be told by media like Financial Times and corrupt officials from IMF, World Bank etc.
    http://www.zerohedge.com/news/2016-04-04/2018-%E2%80%93-sdr-world-currency-backed-gold

    Panama Papers expose only the outer circle of NWO, banker and inner-circle are missing from release. The real info releases are ignored by the media cartel.
    http://katehon.com/article/geopolitics-corruption-george-soros-and-panama-leaks

    John Key is clearly still working for the US Federal Reserve Bank, who own the Ozzie big four, see first link of Global Network of Corporate Control. All goes back to the Black Rock at the dark heart of the Fed Reserve Bank.
    JK worked for the Fed in NY up until 2001. https://en.wikipedia.org/wiki/John_Key

    More another time. All the best team.

  9. Libya had a state bank – A bad example to the World obviously.

    Whats more Gadaffi was spearheading a Bank of Africa heading towards independence from the IMF and World bank. That definitely had to be changed

    North Decota has a state bank which is thriving and funding / supporting community. Wall Street is furious but that Republican state will not let their jewel be tampered with.

  10. Several points. 1- 5 billion profit for foreign banks? Yeah right. Thats just a pretty hand me down for the DOPEY public! The BULK of REAL profit is probably in TAX HAVENS!. What WAS NZs TOTAL EXPENDITURE on LOAN INTEREST last year. OOOOOH SECRET STUFF. Secrecy always precedes THEFT! 2- NZ POST is a CONSIQUENCE of our DOPEY open market policy because we have replaced our mail business and most of its employment and profit with a BILL to FOREIGN INTERNET CO. HOW much is THAT NZ? OOOOOOH DONT KNOW!!!. Gone like clothing- pottery- CNG-housing-manufacturing -BANKING etc etc. ALL REPLACED by FOREIGN EXPENDITURE!!! And the reward looks like POVERTY! 3- CANT build up capital or NO PROFIT??? SO why is the CREDIT UNION SYSTEM working so WELL. SMARTEN UP NZ!!! BANK with the system that WORKS for NZ! CREDIT UNION!!!. 4- PENSION FUNDS. GREAT IDEA but LETS LEAVE many LOOPHOLES so it CAN be FLEECED AGAIN in a FEW YEARS after the DOPEY WORKER UNIT has done all the WORK!!! WAKE UP NZ cause we are being ROLLED year after YEAR!!!

  11. Critical issue here James, good work, keep it up!

    What will happen to our Ozzie banks if their main shareholders are bankrupt?

    The big 4 Ozzie banks are owned/controlled by the likes of JP Morgan, Citi Bank (basically the US-Federal Reserve). Their business model is broken, since 2008 it’s been clear that profit from debt hasn’t been working.

    How do Bretton Woods institutions interact with our banking sector? Especially World Bank. What truth is there behind plans for a new world currency? Whate is the relationship between NZD and the USD based global repo payment system, BRICS alternative payment system (which NZ joined early), the roll of gold (especially from Global Debt Facility, World Bank), and the derivatives and junk bond market?

    How do we escape cooperate banking and get back to public banking? eg, how could BNZ (was state owned til 1992) be returned to state ownership? Bold moves in this direction welcome.

    I’ll dig out some links, later.

    Thanks to Julie too, her good work regarding corruption ties in well.

    “High time to replace corporate banking and corruption, with public banking and transparency.” Dale

  12. Nobody seems to have noticed that this is an indirect way for the government to extract money from the Cullen fund (ironically announced by the man himself). 7 years ago they stopped putting money in, which has cost us billions, now they are taking money out making it even less likely that the fund will be able to fund super in years to come.

  13. This seems to be an issue where we get jam today, at the expense of possibly not having jam tomorrow.

    The government gets a few hundred million dollars to prop up their sagging accounts, and NZ Post gets a bit of cash to prop up its sunsetting business, without the government having to put in a cent.

    The downside is that it saddles a future Labour or Green government with a $1 billion dolar liability (although taking on that liability is their choice). Financial wizardry to get money now and screw the opposition at some point in the future seems like a no-brainer for National.

    I’d really like to know how ACC and the Super Fund were strong-armed into spending their money. Are they getting a significant discount or was there some other incentive provided? Alternatively, is NZ Post letting down its shareholders (the government) by not trying to get the best deal?

    Personally I’m not against this deal in principle but there are a lot of questions that strain its credibility, and it is definitely a step towards privatisation despite gov’t denials.

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