Kiwibank says the four big Australian owned banks are sending $5 billion in profits a year back to Australia and it’s time New Zealand hung on to some of it.

The locally owned bank is ramping up its business banking operation and is putting a major focus on Auckland.

Kiwibank CEO, Steve Jurkovich, has been holding a card up his sleeve but he hasn’t been quite sure when or how to play it.

New Zealanders’ desire to beat Australia is ingrained – almost from birth. In rugby, racehorses, barista coffee and race relations – we like to think we are better than the Aussies. Hell, we even promote the idea that our politicians are somehow superior.  

Jurkovich knows there is a deep well of patriotism to drink from but using it against the Aussie banks has been more of a scribble on a whiteboard than an actual strategy.

After a year in the job, Jurkovich, and his acting head of marketing, Simon Hofmann, are about to put the rivalry card firmly down on the table. A new advertising campaign will roll out shortly, timed it seems, to coincide with a major sporting event in Japan.

Jurkovich gave an indication of how he plans to attack the Australian banks at a breakfast event in Auckland last week. He asked the 100 or so businesspeople in the room, “put your hands up if you are going to back the Wallabies to win the Rugby World Cup? Didn’t think you were; so, we are a bit confused as to why you back them for your banking”.

Of course, if the breakfast crowd could’ve answered, the reasons would’ve been varied and complex but the economic argument for supporting Kiwibank or other local banks has a compelling logic. 

Even a 10 percent slice of the $5 billion flowing back to Australia from the ANZ, Westpac, BNZ, and ASB would be a serious amount of money and a boost to the local economy.

It was no coincidence Jurkovich chose the Emirates Team New Zealand headquarters as the venue for the breakfast and his campaign prelude.

It won’t be long before ETNZ’s base at the Viaduct Basin will again be a focus for patriotic Kiwi aspirations around hi-tech, skill, sophisticated teamwork and winning (hopefully).

Kiwibank’s support for ETNZ, which the bank says is not a sponsorship but involves supplying banking expertise to ETNZ, also gives the bank some access to the mana of Grant Dalton, arguably the smartest, or at least the most persuasive, businessman in New Zealand sport.

Dalton told the breakfasters while it was important that the ‘Cup’ wasn’t just seen as an Auckland event it would, once again, be transformative for New Zealand’s biggest city when the foreign teams started rolling in for the 2021 challenge.

For Jurkovich, the challenge is to get some of that Auckland action. Kiwibank was created 17 years ago but has struggled to get traction in the country’s business capital. It is part of the reason Jurkovich got the job.

Before taking over at Kiwibank he was head of business banking at ASB and played a key role in turning what was primarily a retail bank into a strong business bank, particularly in Auckland.

He needs to do the same with Kiwibank if he is going to meet his shareholders’ goal of doubling the size of the bank in the next five to seven years.

While the bacon and eggs were delivered to tables Jurkovich confided that the shareholders ACC, NZ Post and the NZ super fund had told him they wanted him to focus on significant long-term growth and not get too worried about the next quarter.

“I don’t mind telling you that they only wanted any sort of reward (bonus) to kick in after 7 years….and that is a really different perspective.

“They said if you make a $110 or $120 million (profit) that is great but it doesn’t really make a difference to a large super fund, what we really want you to do is put our money to work in New Zealand and really make a difference.”

Jurkovich promised the bank would become more aggressive and perhaps a bit less risk averse.

“I think we probably have a reputation for being a little cautious, so we need to change that over time, we’re going to reshape the way we are thinking about supporting businesses.

“We have been pretty supportive of property-backed lending. We need to be bolder and stronger around cashflow lending, so you will see that change from us.”

As part of its plan to lift its Auckland profile, Kiwibank is moving from an old NZ Post building in Victoria St to a new building in the Wynyard Quarter, which Jurkovich described as “the home of innovation”.

The new digs will be on a high-profile site on Fanshawe Street – between Air New Zealand and Fonterra.

Jurkovich had another message for the business community: stop feeling so glum.

“We think New Zealand businesses are in great shape and I’m a little surprised how cautious we are.

“Employment, if you want a job in New Zealand you can get one, if you look at our loan impairments, they are at a 20-year low and in terms of people paying their bills we have never been in better shape.”

As the coffee arrived Jurkovich popped one of his favourite quotes up on a big screen.

It belonged to the Oracle of Omaha, Warren Buffett: “Be fearful when others are greedy and be greedy when others are fearful.”

Now, said Jurkovich, was the time for business to push against the prevailing sentiment and take advantage of low interest rates.

“There’s never been a more friendly time for a bit of leverage (borrowing) … investing and supporting your own business to grow. It feels like there is a great opportunity to do that at the moment.

“It is a good time to invest while people are a little cautious. My personal perspective is that this is a great time to get in and invest.”

Before people rushed off to their offices for the daily grind, they got one more reminder of why they should consider switching to a local bank.

“There is $5 billion a year going back to Australia, by my calculation that’s $600,000 every hour. We call it the Kangaroo dividend. Do you want to support that or not?”

Kiwibank is a foundation supporter of Newsroom.

Mark Jennings is co-editor of Newsroom.

Leave a comment