Independent economist Michael Reddell said he blanched at NZ First leader Winston Peters' threat to buy back the Bank of New Zealand from National Australia Bank and merge it with Kiwibank.
"Reddell called the nationalisation threat a pretty bad signal to foreign investors."Michael Reddell, independent economist
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Independent economist Michael Reddell said he blanched at NZ First leader Winston Peters' threat to buy back the Bank of New Zealand from National Australia Bank and merge it with Kiwibank.
Peters made the announcement on 17 May 2026. He said the new entity would keep banking profits in New Zealand and pressure the Australian-owned majors on margins. Peters described the proposal as "not nationalisation – this is taking back our country."
Peters put the likely cost at $7.5 billion upwards. He warned that NAB would face the prospect of nationalisation if it refused to sell.
Peters claimed the merged bank would be commercially run — not operated as a government department — and would provide the scale needed to compete more aggressively with the major Australian-owned banks, particularly for agriculture, SMEs and infrastructure.
Reddell called the nationalisation threat "a pretty bad signal" to foreign investors. He noted that Australia is not in recession.
"Reddell called the nationalisation threat a pretty bad signal to foreign investors." — Michael Reddell, independent economist
NAB would likely demand an over-the-top price, Reddell said. He asked: "What's in it for the taxpayer?"
Reddell argued that merging two of the five biggest banks would reduce competition. He said state-owned banks risk political imperatives driving bad credit decisions without the market discipline that listed ownership provides.
Reddell recommended making it easier for foreign firms to set up new banks in New Zealand rather than government re-entering banking — a direct challenge to what he characterised as a throwback to the 1970s.
Prime Minister Christopher Luxon dismissed the idea outright. He said it would require "$30 billion of more borrowing that we don't have."
Luxon said the proposal sounds like a Labour or Greens policy.
The government sold BNZ to NAB in 1992 for NZ$1.48 billion. The bank has since delivered substantial dividends to its Australian parent.
BNZ posted a statutory net profit of $494 million for the six months to 31 March 2026. ANZ New Zealand recorded a cash net profit after tax of $1.238 billion in the same period.
Four Australian-owned banks — ANZ, ASB, BNZ and Westpac — control around 85% of the New Zealand banking system. Kiwibank holds just under 8% of the mortgage market and has around $43 billion in total assets.
The RBNZ May 2026 Financial Stability Report states the sector remains well placed with strong capital buffers and high deposit funding.
NZ First polls between 9.7% and 11.5%. The 2026 general election is set for 7 November.
Peters predicted coalition partners would cave in after the vote. Reddell prefers easing entry for new private foreign banks instead of state re-entry.
The proposal risks further damaging New Zealand's reputation with foreign investors at a time when the country seeks more capital inflows.
Taxpayers would bear the full cost of any overpayment and any future losses from politically driven lending.
