A $30 billion proposal to reclaim BNZ has split political opinion sharply
A proposal to buy back the Bank of New Zealand from its Australian parent and merge it with Kiwibank has triggered sharp political debate ahead of New Zealand's November 7 election, 1News reported.
New Zealand First leader Winston Peters unveiled the policy during a campaign event in West Auckland, arguing that NZ should repurchase BNZ from National Australia Bank and combine it with Kiwibank to form a new state-owned commercial bank to be called the "National Bank of New Zealand." Peters put the purchase price at "something above $7.5 billion."
He noted that Kiwibank currently holds just under 8% of the mortgage market after more than two decades of operation — a domestic challenger Peters argued has been constrained by capital availability and is too small to exert meaningful pricing pressure on the Australian-owned majors.
The cost dispute
The response from within the coalition was blunt. National Minister Chris Bishop, appearing on a political panel on Breakfast, dismissed the plan as a "fantastical proposition."
"Seriously, it's fantasy land stuff," Bishop said, citing estimates of between $24 billion and $30 billion as the true cost — far above Peters' figure — with much of it to be funded through borrowing.
Bishop put the scale of that commitment in stark terms: "That is basically, the next eight years of capital spending all in one go, so it would come at the expense of roads, hospitals, schools, and rail."
Massey Business School professor Claire Matthews said BNZ's book value was approximately $13.7 billion and said a negotiated sale would likely require a premium above that — well above Peters' $7.5 billion estimate.
Bishop also raised a fundamental structural objection.
"Which, by the way, is not for sale. Normally, there's a willing buyer and a willing seller — it's not for sale as far as I know, so we're paying a premium," he said.
Finance Minister Nicola Willis described the proposal as "extremely reckless", saying substantial borrowing or tax increases would be required to finance the purchase.
Bishop acknowledged the need for greater banking competition but said the government's focus should be on backing Kiwibank rather than a multibillion-dollar acquisition.
The competition concern is not new — the Commerce Commission's 2024 personal banking market study described New Zealand banking as a "stable oligopoly" with sustained profitability and limited innovation.
Peters pushes back
Peters did not retreat from the proposal. On Monday he argued critics were misreading both his party's financing strategy and the state of the Australian economy, saying New Zealand needed to "recalibrate" its approach to debt.
"We pay far too much costly debt everywhere… This is a world awash with money," Peters said, adding that New Zealand's democratic stability made it a strong candidate for investment.
He outlined a "blended funding stack" to finance the purchase — including a New Zealand Sovereign Banking Bond marketed to retail and KiwiSaver investors, long-dated Crown debt, investment from the NZ Future Fund and ACC on commercial terms, and Kiwibank's existing capital base. Peters also argued the deal would effectively be self-funding, citing BNZ's annual cash earnings of more than $1.5 billion.
Labour MP Tangi Utikere was equally sceptical, calling the proposal "another reckon from Winston Peters" and noting that as a coalition partner, NZ First already had the ability to pursue KiwiSaver reform without a major new policy announcement.
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