Radio NZ reporting that Aussie banks are dropping their mortgage interest rates for a second time in a week to try and match Kiwibank. Can’t get link yet.
Doesn’t bode well for economic expectations but makes nonsense of Ralph Norris’ (NAB/BNZ) claim earlier this week that Kiwibank rates were too low.
About time Key gave Kiwibank the small capital boost it needs to move business lending rates down in a similar way.
I’m sick of the one way funnelling of cash west over the ditch.
Kiwibank! Whoop!
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Mr Norris’ sour grapes were as much aimed at the NZ government as Kiwibank. He would one of the first off the blocks if National moved to privatise Kiwibank. It was, I think, a goading of the government to consider this option.
Political highlights in MPs achievements.
Kiwi bank – Jim
The gold card – Winny
Both for NZders by NZders
Lets have a lot more.
Norris is Commonwealth Bank of Australia (CBA). Cameron Clyne is CEO of NAB.
Nationalise banking.
Awesome story, state ownership triumphing over foreigners. If there is one thing the state needs to take back in the NZ economy, you gotta start with the banks.
Spud AKA “the great helmsman” has done well in his tenure as head of KiwiBank.
My mortgage is with ANZ and when my fixed term is up I will be transferring it to KiwiBank.
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K I W I B A N K!!!!!!
Darn, the dots were displaced
“About time Key gave Kiwibank the small capital boost it needs to move business lending rates down in a similar way.”
Trevor, what is your opinion about doing this via a partial float available to NZ citizens only (and can only be onsold to NZ citizens) you were for some liberalisation in government, how about opposition..?
A float of shares would be a good way of getting rid of what we have.
Keep it together even if a bit smaller than what might be.
Support it through using it. Patriotism is not dead.
A new Govt may strengthen the Kiwibank.
Yeah, Mum and Dad (puke) investors could go hocking their shares off to some overseas crooks!
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Thought my head would pop agreeing with TM on anything, but there you go. Even as a right leaning voter, I thought Jim Anderton and the left in general deserve and still do deserve a lot of credit for Kiwibank…
Could just go simple, loan Kiwibank the money required on terms that they pay it back to the Govt over the next 10 years with a healthy dose of interest.
I find it funny when the right get all angry that something like Kiwibank actually promotes competition
@ Jeremy – yes I do support using partial sale of newly developed non core subsidiaries as a way of sharing risk, boosting capital and developing NZ market. No way does sale of Kiwibank meet those criteria.
I’m pretty sure a partial float to mum and dad investors is the same way we sold the last bank we had.
Stupid idea. We all already own it. If it does well, we do well. Especially if we’re banking with them.
” No way does sale of Kiwibank meet those criteria.”
“About time Key gave Kiwibank the small capital boost it needs to move business lending rates down in a similar way”
So Trevor how do you expect to see how this capital boost can occur. There is already pressure on the govt accounts. And I am sure that Lab has some ideas on additional spending. Increasing the PAYE top threashold back to 38% will not fund the promises (especially as the ability for the wealthy to manage their tax exposure) so all increasing tax rate will do is penalise the same people that you hit in 99. So I ask politely where will this money come from?
Or have you some ideas on govt intervention into the Cullen fund. or the Nat Super fund.
How many ‘Mum & Dads’ still have their power company shares?
A partial float is only going to end up one way and that is with the eventual corporate ownership of those shares.
Kiwibank is owned by us, the taxpayers of this country but what it needs is an injection of capital. The government can make this happen even if it means printing the bloody money. We are not talking billions of dollars here.
SME’s, in this country, have their backs to wall in a big way at the moment and they are being royally screwed by the Australian banks. How do I know? Because the company I work for (6 employees) is one of those companies being screwed. The owners are completely open to the employees about the financial position of the company (a first in the 26 years of my working life) and we are in a minority of not only paying the interest on our finance but also principal. We are under extreme pressure and the end result is one of us is going to lose their job to keep the company afloat.
Our local lending manager (I wont say which bank) is sympathetic but his hands are tied as everything is being approved via Wellington. The end result is the banks inaction is strangling the lifeblood out of SME’s in this country. On one hand they are telling companies they need to be agressively collecting debt and on the other hand telling companies, pay this account but not that one.
Something needs to change and change soon.
A loan to Kiwibank solves the problem. The Govt borrows the money internationally at a low rate – like it dies now – and amkes on it by lending it on to Kiwibank.
This loan to Kiwibank adds to the Govt’s assets, gives the Govt a predictable stream of cash from the loan – and a larger dividend from Kiwibank making higher profits in new areas of activity.
Win win win.
lol “like it does now”
Maybe I was thinking of something else
@ Herodotus – investment in Kiwibank = nil effect on net debt. Loota would have to be equity not loan to get ratios right in Kiwibank.
trev unless there has been something that has escaped grabbing my attention, yet I am unable to see what mechanism/s are to be utilized to increase Kiwibanks capital boost
“@ Herodotus – investment in Kiwibank = nil effect on net debt” there is something that is missing for me the expectation of a return for this use of capital funds, from a business sense there has to be cost of capital + returns as a basic expectation, then we have the Res Banks controls such as capital targets, lending limits (If anyone wants to borrow ior is able to).
Where is this boost comming from?
If the money is from the govt then there is the opportunity costs of these funds, will DOC, education, heath etc suffer from reduced access to govt support to fund kiwibank?
Herod.
At a minimum won’t the Govt get an increase in dividend from Kiwibank as the bank’s newly expanded operations make new profits?
By the way, shareholders will often approve the creation and sale of new shares (which adversely dilutes their own existing shareholding) if they see that the company is going to use the new shareholders funds raised for good productive purposes which should, in theory, eventually be reflected in a better than even rise in the share price.
The company doesn’t have to promise said shareholders with a strictly defined and timetabled ‘return on investment’ as long as those shareholders can see that raising those funds makes sense strategically.
Loota, but thes epotential new shareholders could be mr and Mrs Kiwi. i.e. You and I. Yet we are still struggling to live on our incomes, so where will we find the money to invest. the mum dad mentality is great in rhetoric but we all know has no substance in being delivered. Remember Telecom, those many power coys that dished out shares to their customers for take over bids that tempted Mr and mrs Kiwi with quick returns. From memory The power co that serviced West, Cent and part of the shore then was taken over.
So you are happy to incur some debt to buy these shares, with no income from said shares to fund this debt even on an interest only basis and wait for the capital gain to accrue. But then there is cap gains tax as you are funding this investment with negative gearing and not expecting this to be a substaining investment on its own merrits. It would be another means for the elite to invest in strategic assets and milk the rest of us.
They should start operating kiwibank at the perfect competition equilibrium point, get the government to say Oh we are doing this to operate the buisness in the publics best interest + some profit instead of just maximisation of profit because that’s our job as the government, in a couple of days all the other banks go completely out of buisness and would be cheap to buy. Then pass a law to let the govt. buy banks if we don’t already have one, kiwibank absorbs all the banks in the country into a single state monopoly being run at perfect competition equilibrium. Good for the people as the pricing would be at a good equilibrium, no need for the OCR because the govt. already runs all the banks, a whole lot of extra revenue for the state so opportunity for tax cuts/more money for public services
Several birds with one stone, wouldn’t cost that much money and wouldn’t be breaking any laws.
Come on what is wrong with that plan.
Dylan, you are proposing in part a socialist type of bank, it works well in North Dakota:
http://en.wikipedia.org/wiki/Bank_of_North_Dakota
Jeremy not exactly socialist style, it would still be making a profit just only as much profit as if it were in a competitive environment, thats how other state monopolies such as kiwirail are run to my understanding
Yes there would also be a socialist interest in it. But whatever the style it would stop our money going west to australia and would be good for NZ for the other things I mentioned above. We need more action over these kinds of problems.
Trevor you said ‘I’m sick of the one way funnelling of cash west over the ditch.’ Where is your ambition and passion over this issue, why is the labour party so afraid to take any extensive action over these things, politicians can’t be afraid of stepping on peoples toes to get anything done if it’s for the common good
@ Loota
A loan to Kiwibank solves the problem.
No, it doesn’t.
Banks must hold a certain percentage of Capital against their Assets. A ‘loan’ from the Government is exactly that – a loan, and it’s just like any deposit you or I make to Kiwibank. For Kiwibank to continue growing, it needs more Capital injected into it, or else it will breach the Capital Ratios all banks must meet (as regulated by the RBNZ).
That Kiwibank is unable to generate it’s own Capital growth from profitability is an indication that its margins/rates are indeed to low. This isn’t a political statement, it’s a logical result from the accounting identity of Assets = Liabilities + Capital.
Sounds like full marks to Jim Anderton – and lets hope that his prospect of being elected is enhanced.
On the other hand, John Banks has been trying to manage a rather large elephant in his room.
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10678831
He is not much tougher than Len Brown when the going gets tough.
And his fear tactics about a potential “South Aucklandisation” of the supercity seem as hollow now as they sounded patronising before.