Kiwibank chief goes before Govt call

Kiwibank chief executive Sam Knowles yesterday resigned before a key Government decision whether the taxpayer will continue to underwrite the bank's future including plans for expansion into the corporate and rural sectors.

Despite Mr Knowles' denials, Opposition MPs said his resignation was further evidence the Government was preparing the bank and other state-owned assets for sale.

Mr Knowles said his decision followed months of discussions with the bank's board and was in no way related to Finance Minister Bill English's comments last week signalling the bank would top a list of state assets the Government may consider selling in a second term.

But after 10 years with the bank, including two years of planning before it began eight years ago, he believed now was the right time to step down.

In recent months he had prepared plans for the bank's next 10 years which would see it grow assets even "faster and further" than it already had, he said.

It could grow by up to $3 billion a year giving it a balance sheet of up to $42 billion by the end of that period.

Expansion into corporate banking was "part of the mix" as was rural banking, currently being underfunded by the big Australian banks, according to Kiwibank chairman Jim Bolger.

That business case was now being considered by Government.

"We're optimistic they'll agree to it but I think it's the right time for me to stand back and allow someone else to come in," said Mr Knowles.

While Mr English last week said Kiwibank required an "awful lot of capital", Mr Knowles said the plans needed less than $100 million.

Prime Minister John Key said Kiwibank's board had made it clear they wanted to grow "and without further capital they'll be restricted in doing that".

Cabinet had not yet considered the matter and the Government hadn't knocked them back.

Mr Key said Kiwibank would "most probably" remain in New Zealand hands "but no decisions have been made on SOEs yet and I'm not going to start speculate on that today".

Labour finance spokesman David Cunliffe said Mr Knowles' resignation was a huge loss, "and couldn't be worse timing for the Government given the uncertainty Bill English has created about the bank's future".