Kiwibank opened its doors late on the morning of 11 February 2002, in the Central PostShop in Church Street, Palmerston North. Chairman Jim Bolger, the former National Prime Minister, unveiled the bank’s logo on the shop verandah alongside the city’s mayor, Mark Bell-Booth. Two more branches opened in Palmerston North that afternoon and four more in Hawke’s Bay the next day. Seven counters, a six-week pilot, $80 million of share capital and not a single customer on the books.
Twenty-four years later that bank has $38.9 billion out on loan and $32.7 billion of deposits, and it is the largest New Zealand owned bank in the country.
Kiwibank exists because one politician refused to stop asking for it. Jim Anderton was Deputy Prime Minister and Minister for Economic Development in Helen Clark’s first term, and the leader of the Alliance, the smaller partner in the 1999 coalition. He wanted a nationwide bank that was owned in New Zealand and kept its profits here. Almost nobody senior in that government wanted to give it to him.
The idea the Cabinet did not want
The banking market Anderton was arguing against was, and largely still is, four Australian owned banks. His case was that competition had gone out of the sector, that fees were rising, that branches were closing in small towns, and that the profits were leaving the country. The counter-argument from Treasury and from Finance Minister Michael Cullen was straightforward. Banking is a risky business, the Crown balance sheet should not be exposed to it, and a government with a hard-won surplus had better things to do with capital.
The vehicle Anderton proposed got around part of that objection. The bank would not be built from scratch. It would sit inside New Zealand Post, using the PostShop counter network that already reached into towns the Australian banks were leaving. That gave it a distribution footprint on day one that no new entrant could have bought.
It still took months. Anderton described the final meeting nine years later, in his valedictory statement to Parliament on 4 October 2011, and prefaced it by saying it was something he had never disclosed.
After months of exhaustive advocacy by me of the New Zealand Post business case for the bank—I had to knock down every objection, and they were multitudinous, one by one—Annette King finally turned to Michael Cullen, after 3 hours of this, and said these immortal words: “Michael, Jim’s beaten back every argument against the bank we’ve ever put up—for God’s sake give him the bloody bank!”. And Michael Cullen, in equally immortal words, said: “Oh, all right then.”
That is how the largest New Zealand owned bank was authorised. Three hours of argument, and a colleague running out of patience on his behalf.
Building it in public
The board was announced on 5 November 2001, chaired by Bolger alongside NZ Post chief executive Elmar Toime. A former National Prime Minister running an Alliance policy was a striking piece of casting. Anderton welcomed the appointments in the language of a man who had spent a year being told the thing could not work.
There are those in the opposition who say that New Zealanders are not good enough to run or own our own bank. The Kiwibank which will be run by our most respected enterprise, NZ Post, will show they are wrong.
He also set a target that now looks modest. The bank would need 100,000 customers over three years, which he pointed out was about 5 per cent of the banking market.
The competitive effect arrived before the bank did. In January 2002, a month before the first branch opened, ANZ launched a low-fee account aimed squarely at the newcomer. Anderton’s response on 15 January is worth reading as a statement of what he thought the bank was actually for.
The Australian banks should be explaining why they can afford to reduce their fees now, when they couldn’t afford to do it until the prospect of competition from Kiwibank arrived.
That was always the deeper argument. The value of Kiwibank was never going to be only the customers it won. It was the pricing pressure it put on the four banks that held the rest of the market.
The numbers that followed
The pilot went national across April and May 2002. Growth was faster than the target Anderton had set. By September 2007, when he was no longer Deputy Prime Minister but still in Cabinet, he was welcoming an after-tax profit of $25.5 million for the year to 30 June 2007, up 61 per cent, on a customer base that had passed 550,000. Chief executive Sam Knowles reported that an average of 2,000 people a week had opened accounts that year.
The ownership has moved around since. New Zealand Post sold 25 per cent to the New Zealand Superannuation Fund and 22 per cent to ACC in 2016. In August 2022 the Crown bought the whole holding company back for about $2.1 billion, and Kiwibank is now owned directly by the government through Kiwi Group Capital.
The most recent full year, to 30 June 2026, tells you both how far it has come and where it is stuck. Profit fell 9 per cent to $174 million as the bank traded margin for growth, lending grew $3.1 billion, and deposits rose $2.4 billion. It helped close to 8,000 customers into homes, more than 3,200 of them first home buyers. But it still holds only 6.3 per cent of the lending market and 6.6 per cent of deposits.
Kiwibank total assets, 2002 to 2026
Balance sheet at 30 June each year, in billions of dollars
Kiwibank opened with $177 million of assets in its first part-year of trading and finished the June 2026 year with $44.9 billion. Source — Kiwibank General Disclosure Statements, banking group total assets as at 30 June. Chart by NEWS WIRE.
Show the numbers
| Year to 30 June | Total assets ($m) |
|---|---|
| 2002 | 177 |
| 2003 | 771 |
| 2004 | 1,305 |
| 2005 | 1,860 |
| 2006 | 3,073 |
| 2007 | 4,760 |
| 2008 | 7,219 |
| 2009 | 10,371 |
| 2010 | 12,238 |
| 2011 | 13,875 |
| 2012 | 14,745 |
| 2013 | 15,209 |
| 2014 | 16,676 |
| 2015 | 18,344 |
| 2016 | 19,357 |
| 2017 | 20,616 |
| 2018 | 20,715 |
| 2019 | 22,734 |
| 2020 | 25,518 |
| 2021 | 28,229 |
| 2022 | 31,547 |
| 2023 | 33,838 |
| 2024 | 36,650 |
| 2025 | 40,660 |
| 2026 | 44,878 |
The argument that never finished
Anderton’s original complaint has outlived him. The Commerce Commission published its final report on personal banking competition on 20 August 2024, and described what it found as a stable, highly profitable, two-tier oligopoly with no disruptive maverick and a lack of obvious or aggressive price competition. Its recommendation on Kiwibank read like a verdict on the previous two decades.
The Government, as Kiwibank’s owner, should consider what is necessary to make Kiwibank a disruptive competitor, including how to provide it with access to more capital.
That has proved harder than it sounds. Ministers approved a $500 million capital raise from domestic institutions in July 2025. It was shelved in December that year after the Reserve Bank eased capital settings and Kiwibank raised $400 million of subordinated bonds instead. In May 2026 the State Owned Enterprises Minister wrote to Kiwi Group Capital asking for alternative growth scenarios, which put the question of a partial sale back into public debate.
So the bank Anderton had to fight his own Cabinet for is still, twenty-four years on, the subject of an argument about whether the state should own a bank and how much of the country’s capital it should tie up doing it. Where the parties sit on that question is one of the clearer dividing lines heading into the 7 November election, and our voting tool covers where they stand.
The legacy
Jim Anderton died in Christchurch on 7 January 2018, aged 79, after 27 years in Parliament across four parties. Helen Clark, who had been one of the doubters, was direct about it after his death, saying of Anderton and the bank, I was wrong and he was right on that one. Michael Cullen made a different point, cautioning that it would be a mistake to reduce Anderton’s legacy to Kiwibank alone. Bolger, who had spent a career on the other side of politics from Anderton, said no one in politics would now disagree with the goal of a fair society his former adversary stood for.
Anderton put the point himself in that valedictory statement, in the sentence just before the story about the Cabinet meeting.
We have Kiwibank and Air New Zealand to remind us that publicly owned assets can be run successfully by high-quality Public Service and other appointees of the Government in the interests of all New Zealanders.
Whether or not you accept that proposition, the more useful lesson from Kiwibank is about persistence. It was not a policy that arrived on a wave of public enthusiasm or a mandate. It was a minor coalition partner’s idea, opposed by the Prime Minister and the Finance Minister, that survived because one minister kept knocking down objections until the objections ran out. Most policy does not work that way. Almost none of it ends up with 6 per cent of a national market and a board chaired by a Prime Minister from the other side.
Sources — Hansard, Valedictory Statements, 4 October 2011; Beehive, Anderton welcomes Kiwibank, 5 November 2001; Beehive, Even customers of Aussie banks benefit from Kiwibank, 15 January 2002; Beehive, Kiwibank continues on its successful way, 6 September 2007; NZ Post, First Kiwibank to open in Palmerston North, 7 February 2002; Commerce Commission personal banking market study final report, 20 August 2024; NZ Herald, Kiwibank opens for business in Palmerston North, 11 February 2002; NZ Herald, Jim Anderton remembered, January 2018; Otago Daily Times, Fought for Kiwibank and fair society, 7 January 2018; Kiwibank General Disclosure Statements, 2003 to 2026.
What do you think? Was Kiwibank worth the money and the political fight, and should the government still own a bank? Drop a comment below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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