A proposal to float government-owned Kiwibank on the sharemarket has received lukewarm approval by sharebrokers, while left wing politicians have poured scorn on the idea.
New Zealand First leader Winston Peters was accused of blatant electioneering by proposing that Kiwibank be separated from New Zealand Post and become a stand-alone commercial bank.
He wanted the bank floated with shares bought and owned by New Zealanders and ring-fenced, so they could not be sold to foreigners.
"The next step is to put all the government's $55 billion worth of business through Kiwibank, ensuring all the profits stay here in New Zealand and forcing interest rates down," he said in a speech.
ABN Amro Craigs broker Chris Timms said the appeal of Kiwibank to many New Zealanders was that it was a "quasi state-owned enterprise" because it was owned by New Zealand Post.
If it was to be floated, it would need some sort of government shareholding, similar to that of Air New Zealand, to provide security to clients.
"If it stands on its own, it is too small to compete with the Australian-owned banks, and it doesn't have the same credit rating as those banks."
There had been talk in the market, even before the bank deposits guarantee announced by the Government, that Kiwibank would be secure because of its government ownership, Mr Timms said.
The major banks would not be happy with losing government business.
It would be difficult to restrict shareholding to just New Zealanders.
Someone in the United States could buy shares using a legitimate New Zealand address, or family members in New Zealand could buy the shares for overseas relatives, he said.
Progressive leader Jim Anderton, the architect of Kiwibank, launched into Mr Peters yesterday.
"Coming only weeks after Winston Peters personally signed a pledge stating `my party will not initiate or support the sale of Kiwibank', his promise now to sell shares is erratic and confusing."
The bank had attracted nearly 700,000 customers - still at the rate of 2000 new customers each week.
It was worth $500 million and it was successful.
"Selling Kiwibank would destroy it as fast as some political parties' secret donors could get their hands on it.
"Winston Peters is a serial asset seller. When he says shares in Kiwibank would only be sold to New Zealanders, that now has as much credibility as his personal signature on a pledge not to sell the bank at all. This is the worst kind of pre-election political opportunism," Mr Anderton said.
Green Party co-leader Russel Norman said Mr Peters seemed to have lost his way in the middle of the economic crisis.
Privatising Kiwibank would inevitably lead to its overseas ownership, like all the other big banks.
That would see Kiwibank's profits sent off to overseas owners in good times and bad times.
New Zealand would be further exposed to financial crises from which it might otherwise have been insulated.
Dr Norman said National Party leader John Key and the overseas-owned banks must be rubbing their hands with glee at the opportunity to get their hands on the bank.
A National Party spokesman said National had no plans to sell Kiwibank.
Prime Minister Helen Clark has ruled out selling Kiwibank to New Zealand shareholders, and says it is doing fine as it is.
