KiwiBank mulls $150 million note sale

Kiwibank, the banking unit of state-owned New Zealand Post, is mulling a $150 million note sale to help the bank meet regulatory requirements.

The bank's Kiwi Capital Funding unit is considering the sale of perpetual capital notes to invest in "regulatory capital instruments to be issued by Kiwibank, which will help Kiwibank meet its regulatory capital requirements under the Reserve Bank's Basel III framework," it said in a statement. It expected to make a formal offer later this month, and is yet to detail interest rate on the notes.

Launched in 2002, Kiwibank had 880,000 customers as at Dec. 31, accounting for one in four of all bank account holders in New Zealand, with about half of those having their main banking with the state provider, giving it an estimated 11.6 percent of the market. The bank, which is focused on small to medium business and individual customers, has benefited from the wide reach of NZ Post's retail store network, and it took over management of the stores in the latest period.

Earlier this year, the lender said it expects this year to pay its first annual dividend after 13 years of operation, reflecting its increased size, record profits and its ability to fund its own activities. Kiwibank increased profit 37 percent to a record $71 million in the six months ended Dec. 31, with the banking unit accounted for the bulk of NZ Post's $100 million profit in the period.

Kiwi Capital Funding has $100 million worth of bonds on the NZX debt market due in 2019, which are currently priced at $106.76 per $100 face amount, with an interest rate of 5.25 percent.