The media recently reported that negotiations are underway for Kiwibank to take over BNZ from its parent, National Australia Bank (NAB).
Some industry experts, like Simplicity founder Sam Stubbs, believe the deal could be worth anything between $10 billion and $14 billion. They are just unconfirmed rumours at this point, but if pushed forward, the deal would significantly reshape the NZ banking landscape. Kiwibank currently owns only 4.1 5 per cent of the New Zealand market, and analysts believe that buying a competitor might be the bank’s only way to boost its growth prospects.
“Purchasing one of the big four banks would be a relatively easy way for Kiwibank to grow and be able to operate as a full-service commercial bank, rather than the more limited retail bank that it currently is, and also be better positioned to be able to take over the government banking from Westpac,” said Claire Matthews, banking expert at Massey University. “However, I would wonder where the funding would come from, because it would require a lot of capital. And I would expect to see changes to management and governance at Kiwibank, given the different scale and nature of operations at BNZ.”
In other news, mortgage lending was strong in December, up $1 billion from December 2018. The latest RBNZ statistics seem to back up claims that the housing market is in recovery, and record-low interest rates were likely the driver. Out of a total of $6.53 billion, investors borrowed $1.29 billion and first-home buyers $1.20 billion.
In the coming months, the spotlight will be once again on the OCR. At the moment, markets predict that the Official Cash Rate will remain at 1 per cent this year, due to the improved economic outlook. However, ANZ economists warned that “ever-present downside global risks” may have an impact on our monetary policy…
The lending landscape continues to be an interesting space to watch in 2020. And as always, our Mortgage Link advisers have their finger on the pulse of the market.
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