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State-owned Kiwibank will buy a $720 million chunk of HSBC's mortgage book, taking its total home loan portfolio to over $4 billion.
It is expected to use the local debt market to fund the transaction.
The sale of part of HSBC's (Hong Kong Shanghai Banking Corporation) mortgage book to Kiwibank has been tipped for some time. However, the deal announced yesterday will see financial services company AMP, which originally sold the loan book to HSBC four years ago, partner Kiwibank to sell new mortgages.
Kiwibank is to acquire about 6000 loans and manage them under the AMP brand, while AMP's 353-strong adviser network will act as a distribution channel for new AMP-branded but Kiwibank-funded mortgages.
"This relationship will further expand Kiwibank's distribution reach and follows on from last year's acquisition of a 51 per cent stake in New Zealand Home Loans," said Kiwibank chief executive Sam Knowles.
Knowles said Kiwibank was evaluating funding requirements for the transaction, "including the potential to access the domestic debt capital markets".
Further details on the bank's funding would likely be given next week when it released its first-half result.
HSBC said it would sell the loans to Kiwibank at "a slight premium" to their book value of $720 million.
The transaction ended a four-year relationship with AMP, under which HSBC managed AMP's mortgages and also ran any new ones arranged by AMP, HSBC said.
HSBC New Zealand chief executive Norman Wilson said the bank was committed to its remaining $1.57 billion local mortgage book.
AMP managing director Greg Camm expected several hundred million dollars a year in new mortgages would be written.
