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Speaker 1: So the government's given a little more detail about the

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Speaker 1: grand plan for Kiwi Bank. It will be part privatized.

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Speaker 1: Only Kiwis and Kiwi Saver Funds will be able to

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Speaker 1: invest and invest up to a value of five hundred

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Speaker 1: million dollars. Investment banker and financial markets expert Andrew Body

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Speaker 1: has with been our Handrew, Hi, would you put money.

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Speaker 2: In only if I can buy the shares of blowing Ta.

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Speaker 2: Kiwi Bank isn't earning its cost of capital, which is

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Speaker 2: about eleven or twelve percent. It looks like it's return

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Speaker 2: is much lower than that, so you really have to

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Speaker 2: be buying blowing Ta, which is obviously going to highlight

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Speaker 2: the value destruction that's occurred there.

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Speaker 1: Is it smart to limited just to locals.

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Speaker 2: Well, my view as you always want to get the

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Speaker 2: lowest cost of capital and that that's going to be

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Speaker 2: from overseas. I mean, I think the proposal really highlights

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Speaker 2: the intersection of bank profitability, competition and regulation in New Zealand.

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Speaker 2: The king Banks being around for twenty three odd years,

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Speaker 2: it's not able to have been an averick in that

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Speaker 2: in that time, and in fact, the most sensible thing

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Speaker 2: for q Bank is to try to join the banking oligopoly,

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Speaker 2: and that's what that's what investors will want it to do.

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Speaker 2: Is they focused on return.

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Speaker 1: You're making it sound like you don't believe it's actually

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Speaker 1: going to be a disruptor and create competition.

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Speaker 2: No, I don't. I think it won't do any harm.

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Speaker 2: But it's not the panacea. You know, what is the

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Speaker 2: real problem here, which the Commerce Commissions study really highlighted,

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Speaker 2: is regulatory overreach by the Reserve Bank, NB and FMA.

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Speaker 2: A lot of bank regulation just doesn't meet an objective

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Speaker 2: cost benefit analysis. Capital ratios, risk weights, lending classes, bank

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Speaker 2: outsourcing rules, triple CFA AML. They've all increased bank concentration,

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Speaker 2: increased bank costs, prevented entry into the market and courage

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Speaker 2: to exit, reduce flexibility, etc.

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Speaker 1: What do you make of having to wait until it

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Speaker 1: does its digital transformation in twenty twenty eight.

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Speaker 2: Look, I don't have a view about that, but I mean,

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Speaker 2: I guess it just pushes out any impact, you know,

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Speaker 2: raising new capital might have for Q Bank's increase lending

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Speaker 2: in the market.

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Speaker 1: Yeah, Andrew, thanks very much for talking us through it.

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Speaker 1: Andrew Body, Investment bank and Financial markets expert for more

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Speaker 1: from

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Speaker 2: The mic, asking Breakfast, listen live to news talks that'd

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