NZ First has announced a policy to buy BNZ from its Australian parent and merge it with Kiwibank, creating a Crown-owned bank with the scale to compete with the four Australian-owned majors. The proposal comes with a specific funding structure and ahead of the November election.
NZ First has announced a pre-election policy that would see the Government buy Bank of New Zealand from its Australian parent, National Australia Bank, and merge it with Kiwibank — creating a single Crown-owned institution he is calling the "National Bank of New Zealand."
The proposal, presented in a speech in West Auckland on Sunday, is a campaign commitment from NZ First ahead of the November 7 election. It is not current Government policy.
What the proposal involves
The plan calls for the Government to purchase BNZ — which NAB has owned since acquiring it in 1992 — and merge it with Kiwibank, which currently holds just under 8 percent of the mortgage market. Peters' argument is that these banks earn margins in New Zealand that are materially higher than what their parent groups earn in Australia, and that billions of dollars in profits flow across the Tasman each year.
The funding structure proposed includes:
- A New Zealand Sovereign Banking Bond, marketed to domestic retail and KiwiSaver investors
- Long-dated Crown debt at sovereign rates
- A limited tranche of the NZ Future Fund and ACC investment, structured as commercial equity
- Retention of Kiwibank's existing capital base
Peters described the move as "self-financing in expectation" — arguing BNZ generates more than $1.5 billion in annual cash earnings, which would comfortably service the debt and return a surplus to the Crown. He said the fiscal impact would be a "one-off balance-sheet expansion, not an ongoing cost."
The history of BNZ in New Zealand
BNZ traces its roots to the Bank of New Zealand, which was partially government-owned for much of the 20th century. In 1992, the Government sold its 57.3 percent stake to National Australia Bank in a deal valued at NZ$1.48 billion. At the time, BNZ had six of every ten New Zealand banking customers.
By 2013, Deutsche Bank analysts valued BNZ at approximately A$6.2 billion — more than five times what NAB paid. The proposal's valuation of BNZ today is not stated in the speech.
The competitive landscape this would create
Four Australian-owned banks — ANZ, ASB, Westpac, and BNZ — control around 85 percent of New Zealand's banking system. Peters' argument is that these banks earn margins in New Zealand that are materially higher than what their parent groups earn in Australia, and that billions of dollars in profits flow across the Tasman each year.
The proposal frames the merged entity as a domestically owned strategic lender "capable of supporting agriculture, infrastructure, and Small to Medium Enterprises growth on long-horizon terms" — language that reflects a concern about the orientation of bank lending in New Zealand.
Peters cited Crown-owned commercial banks in Singapore, Norway, Germany, Canada, and France as international precedents, arguing New Zealand is "the outlier" among comparable economies in not having one.
What is not in the proposal
The speech does not address whether NAB would be a willing seller at any price the Government would be willing to pay. It also does not detail the new management structure, which Peters said would be announced during the election campaign. The proposal is explicitly a campaign commitment, not a policy in place or in negotiation.
Whether such a transaction proceeds depends entirely on the outcome of the election and subsequent negotiations — and on whether NAB would voluntarily sell a profitable subsidiary that is a systemically important part of the New Zealand banking sector.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.