The island celebrated two important milestones last weekend – one to mark 5-years of a successful operation of a home-grown banking system and the opening of a new supermarket.
Kiwi Bank 5th Anniversary
It is now five years since the government-owned Development Bank expanded its operation to include, under one roof, Kiwibank.
The actual arrangement, according to current manager Mr Wayne McCoughan, is a little more complicated. The entity that has the agency of Kiwibank is a company called Niue Commercial Enterprises Ltd. There is a memorandum between the company, the Niue Government and Kiwibank. The executing arm of NCE Ltd, as far as day to day banking is concerned, is the Niue Development Bank. Despite misgivings by some in the beginning, this arrangement appears to be working quite well.
It has taken a little time for the system to settle because Niue is the only country anywhere outside of NZ that operates an agency of Kiwibank. For the locals, given the island’s constitutional ties with NZ, it’s a banking arrangement made in heaven. With access to the Internet, if you want to pay an account in Wellington or send pocket money to your impoverished polytech-enrolled off-spring, it’s done in a matter of minutes; no more bank-draft, no more cross-border transaction fees. Holidaying friends and relatives can access their Kiwibank account here in Alofi or anywhere in NZ for that matter. It’s important to note though that the agency offers accounts only and not a full commercial banking operation. All loans for example are handled by NDB.
The island has come a long way since the days of the Post Office Savings Bank – POSB – introduced by the NZ administration probably just after the Second World War. As the trading activities amongst the local business houses increased so did the demand for some orderly banking system. The Niue Government Treasury offered a limited service where the traders could deposit their surplus cash with the department thus assisting in the circulation of the legal tender.
Following the granting of self-government in 1974, the Niue Government was able to persuade the Bank of New Zealand to open a branch on the island but the operation didn’t last. Enter the Westpac Banking Corporation but they too were forced to pull out – insufficient banking activities to sustain the operation they said. Next came the PNG-based Bank South Pacific but they too were forced to withdraw. With no one else on the horizon showing any interest in taking over from the Bank SP, the government had little choice but look to its own resources. By this time the Niue Development Bank had been operating for some time, much to the chagrin of the commercial bank. NDB was not only locally owned but also locally operated which meant that there was little or no commercial banking managerial experience. What the island needed was not for another commercial bank to open a branch – three had tried and failed – but for a locally based company to open a banking agency. The only bank in NZ that offers such a service was the Kiwibank. The challenge facing the government was in persuading Kiwibank to loosen its NZ-only policy to allow an agency to operate on Niue. And so in May 2013 a new banking service for the island officially commenced operation with a seamless transfer of all accounts from Bank SP to the Kiwi Bank.
Fingers crossed that in another 5 years NDB/NCE Ltd and Kiwi will celebrate another milestone with another sausage sizzle.