The New Zealand Government is revisiting the prospect of part-privatising Kiwibank as it grapples with significant fiscal constraints that prevent it from supporting the state-owned bank's growth ambitions. In a March 25 letter of expectation to Kiwibank's owner, Kiwi Group Capital, State Owned Enterprises Minister Simeon Brown has directed the company to explore alternative growth scenarios that don't require further government capital injection.

The directive signals a potential shift in the Government's approach to the bank it established as a state-owned competitor to the major Australian-owned banks. Brown has asked KGC to work with Treasury to detail the capital requirements for different growth scenarios, suggesting the Government is seriously weighing options that could involve private sector participation or investment to fund Kiwibank's expansion without drawing on strained public finances.