Sam Stubbs: Simplicity Founder on Kiwibank being allowed to raise $500 million in capital to compete with the major banks

There's a belief it's going to be a long journey to get Kiwibank into the ring with the big leagues. 

Finance Minister Nicola Willis has announced the bank's parent company is being allowed to raise $500 million from investors to help it compete with the four major banks. 

Simplicity founder Sam Stubbs says Kiwibank will need more capital over time. 

He told Mike Hosking if the country has five banks making profits, at least one will re-invest in KiwiSaver. 

Stubbs says it'll bring pricing pressures into the market, which there's very little of right now. 

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Episode Transcript

Speaker 1 (00:00):
It's a movement in banking. Kiwibank have got the green

(00:02):
light for a half billion dollar capital injection. This is
part of the government's idea that if Kiwibank gets a
bigger bulk, they can lend more, grow more, provide more
competition in the sector. Sam Stubbs, as the founder of
Simplicity Kiwi Saberan is with us. Sam morning. Well, any Mike,
your scheme be in.

Speaker 2 (00:17):
Look at the right price. Yes, we would and as
long as we knew that this was just the first
step down a journey of getting Kybank to be really big.
Because five hundred million dollars sounds a lot, but in
banking terms is just to drop in the ocean. Qvbank
would need to raise between ten and twenty billion dollars
to seriously take on the Aussie.

Speaker 1 (00:32):
So will it's not money be there, Jenny?

Speaker 2 (00:34):
Do you think, oh yeah, it will be matte If
you look at qq saber managers right now, Mike, if
they kept their allocation to New Zealand at thirty percent,
which is where they are now, in the next twenty
five years, they've got almost three hundred billion dollars to
invest in New Zealand, so very we could very very
easily recapitalize Kbank. By the way, we could also build
every school, hospital, road, power station we needed. This whole

(00:57):
infrastructure episode can be now funded by Kiwi, Saber. It
just takes time.

Speaker 1 (01:01):
You need return on the money. Though, as far as
what will will it even if you could get the
money the key we Saber and the volume you want,
does it change the banking market?

Speaker 2 (01:10):
It changes the banking market slowly over time, Mike, so
that there's no magic wand here ki Bank has been
undercapitalized for a couple of decades now, as it will
take time to get it up. There. Look, in the
worst possible circumstance, let's pretend Quey Bank becomes really big
and it just starts behaving like the Aussies. Right, so
you have five banks making superprofits, not four. Well, at
least one of them. Those profits will go back into

(01:31):
our key we Saber, Right, so you know we need
at least one really really big, hairy national champion. I
do think it'll bring pricing pressure into the market. There's
very little of it right now. But this is going
to take time. It's going to take lot, you know,
plenty of money, but at least we started the journey, you.

Speaker 1 (01:47):
Know, Okay, the main push for them needs to be
where domestical, commercial, both The.

Speaker 2 (01:54):
The easiest thing forretty bank to do is to lend
on first mortgages. That's not necessarily where I think we
most need the money. I think it's the commercial sector
and the rural sector probably need need that money more
because that's where the Aussie banks have been pulling out
because it's just been so easy to land on on
first mortgages. So there's also really really good margins there
as well. So that's where I would like them to

(02:15):
be focused if they got this additional money. But of
course they'll have their own board and make up their
own mind. But the most important thing, Mike is that
you know, we need more. We need more competition and
we just don't have enough competition.

Speaker 1 (02:25):
Good stuff. Appreciate at sam Stubs Who's with Simplicity of course.

Speaker 2 (02:29):
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