Wednesday, May 22, 2013

Your deposit–guaranteed by a stamp–possibly

There is a certain delightful irony in S&P sounding warning notes about the famed KiwiBank (the policy and concept not the people or the board) and its relationship to Stamp Shop – NZ Post Limited (same caveat).

The NZ Post balance sheet proved a wonderful hoist in setting up AnderBank – a balance sheet not to be trifled with and a capital structure plus the ability to become a retail bank (and in recent years then some) appeared as if by magic.

Groans of “if only” from private sector banks who have to rely on a rather more conventional set of disciplines than those provided by an SOE with significant market power and political owners with deep pockets.

Handy asset backing for deposits since NZ Post is the guarantor for depositors.

So it seemed.

The market for sticky labels to drive snail mail has though…. come unstuck. The plethora of new rapid communication media – email, text, Skype – even ever cheaper cell phones – is leading to significant challenges for the posties.

S&P quite rightly perceive that if the mothership turns dog on the KiwiBank the guarantee may be found to have gone no address. Moreover the signal from the owner seems to be (as it should be) that “return to sender” is not an option either.

The once valuable asset has become at least a potential liability.

At which point the instruction – “find people with an appetite for the risks you are taking if you want to run a competitive bank” may have to be issued – just as it should have been prior to the birth of this much heralded people’s saviour.

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