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Kiwibank To Buy Half Share In Home Loan Company
22 March 2006
Kiwibank To Buy Half Share In Home Loan Company
Kiwibank today announced it has reached agreement to purchase a 51 per cent share holding in the New Zealand Home Loan Company Limited (NZHL). Kiwibank Chief Executive Sam Knowles said purchase of the shares will be completed in June this year when the price will be determined. It is expected to be about $8 million.
NZHL is a privately owned New Zealand company and has been operating in the residential home loan market for 10 years. It currently has customers with about $1.7 billion of home loans.
Mr Knowles said the acquisition of the shareholding was important for Kiwibank as it continues to build its share in the competitive home loan market.
"NZHL has a proven reputation in the home loan market. We will continue to support NZHL operating as a separate trading entity. This enables the bank to reach a broader section of the market with loan structures, credit criteria and rates that will complement the Kiwibank loan range.
"NZHL specialises in helping households to better manage their money through a unique system built on a transactional mortgage facility and also offers a comprehensive risk management service. It operates through a franchise model with 30 independently owned branches operating nationwide."
Chief Executive John Erkkila will continue to manage the company, Neil Richardson will continue as Chairman and Kiwibank will be represented on the board. Mr Erkkila said that the relationship with Kiwibank allowed NZHL to more aggressively pursue its vision of reducing household debt for New Zealanders. He said it will be business as usual for existing clients.
Mr Knowles said that there would be no changes to existing loans, however for the future NZHL will now look to Kiwibank as its funding source.
The purchase of the shareholding in NZHL has been approved by the boards of Kiwibank and New Zealand Post. The purchase will require additional capital investment in Kiwibank to maintain Reserve Bank requirements. This capital will be provided by New Zealand Post.
ENDS
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