Kiwibank’s credit rating has been confirmed at AA- by international credit rating agency Standard & Poor’s.
The state-owned bank now has the same rating as the four major Australian-owned banks operating in New Zealand: Westpac, ASB, ANZ and BNZ.
However, the outlook for Kiwibank has been amended from ‘stable’ to ‘negative’, after the credit rating of its owner, New Zealand Post, was reviewed.
Kiwibank chief executive Paul Brock said the change in New Zealand Post's rating outlook was automatically passed through to Kiwibank.
Standard & Poor’s says the negative outlook for New Zealand Post reflects the ongoing decline in its traditional mail business, in line with postal trends globally.
New Zealand Post chief executive Brian Roche says the change in outlook is disappointing, but he's confident the company will meet the challenges posed by the shrinking mail market.
“New Zealand Post is well positioned to deliver on a sustainable physical network, growing the bank, creating a digital future and a superior customer experience,” Mr Roche said in a statement.
Comments and questions
About time S&P realised how bad NZ Post is being run!
If CHCH people think their council CEO earns mega $$$ look at the Post Exec team
Is S&P back on track? The downgrade due to parent company NZ Post is stupid. S& P are acting as they did prior to GFC but in the opposite direction. If they changed the rating because of NZ Post ownership then they should look, at NZ Post’s owner.
In reality Kiwi Bank needs to stand on it own. be removed from NZ Post and let it become a fully fledged bank in its own right, then perhaps the ratings will mean something
So long as nzpost are willing to burn millions on losing propositions like 'localist', they must always expect to receive negative ratings. There is not one business print directory in the world that is not losing megabucks - why on earth would you want to be involved.
Given that NZ Post and Kiwibank are SOE's behind which the NZ govt stands this is not really that logical. Ultimately Kiwibank is the NZ bank MOST likely to be bailed out following any run on NZ banks.
I disagree - it is logical that Kiwibank should have a lower rating than the NZ Government. There is no formal guarantee that the Government would bail out Kiwibank investors in the event the bank collapses - and even if there were I doubt very much S&P would take it into account in its decisions.
Additionally in the future if Kiwibank and/or NZ Post is sold then there will be even less likelyhood the company will be bailed out.
If you want a Government guaranteed investment then invest in Government bonds. They pay less interest as they are guaranteed by the NZ Govt.
S&P and other ratings reflect the ability of the company to repay bondholders interest at due date and principal payments in the long term - and this also reflects changes in the share ownership, changes in the reg environment, and the housing market etc etc.
One final thing - if "Govt Ownership" somehow made it more likely the govt would bail out bondholders then why are AIR NZ bonds trading at a yield of 6.7% today on the market - 3% above Govt bond yields.
If Kiwibank were to stand on it's own two feet there would need to be a radical shake-up on how it structures business and operates. The only reason they haven't fallen over is due to NZ Post (& Govt cash contributions) propping them up.
Standard business practice says you cannot provide a product or service at a loss and trun a profit - there's a number of fundamental shortcomings with them
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