PHIL REID/FAIRFAX NZ

Kiwibank chief executive Paul Brock.

Kiwibank has been forced to go to shareholders for cash just six months after its partial sale to state-run fund managers.

The Wellington-based bank announced on Friday that shareholders NZ Post, ACC and the NZ Super Fund had agreed to invest $247 million in shares to boost its capital reserves.

It follows a disagreement with the Reserve Bank about the validity of Kiwibank's capital notes, after the central bank took the view that the notes did not comply with its capital adequacy rules.

The decision forced Kiwibank to hastily cancel a $189m bond issue in mid-March, and warn that it could look to shareholders for cash.

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In a statement announcing the move, Kiwibank said it continued to dispute the central bank's decision.

"Kiwibank remains of the strong view that existing convertible capital instruments are compliant and is working with the Reserve Bank of New Zealand to resolve this matter."

Meanwhile, the NZ Super Fund said in a statement that the validity of Kiwibank's capital was confirmed when it was considering whether to buy a partial stake.

"The validity of the capital was part of the due diligence we undertook prior to the acquisition of Kiwibank shares, and we received confirmation of the treatment of these capital instruments, including from the Reserve Bank, at the time," a spokeswoman for NZ Super said.

The Reserve Bank has refused to comment, saying it does not comment on individual banks.

In October, NZ Post completed the partial sale of Kiwibank, offloading a 47 per cent stake for $494m.

The structure of the deal saw NZ Post leave $90m in Kiwibank as part of a capital boost, heavily discounting the value of the transaction to the state-owned enterprise. 

Kiwibank said the shareholders would buy shares "proportionate to their existing shareholdings, reflecting recent announcements by shareholders that Kiwibank's capital ratios will be maintained should the Reserve Bank determine that the convertible capital instruments are not fully compliant."

When the partial sale of Kiwibank was announced, NZ Post signalled it would return around $200m to the Crown, but in February, it announced only a $100m special dividend to the Crown.

NZ Post chief executive Sir Brian Roche said NZ Post intended to pay another special dividend, however this would come after a the completion of a capital review.

On Friday, NZ Post said it was too early to say whether it would be able to return the intended amount to the Crown.

"We will need to work through the funding options available to [NZ] Post before we can confirm any impact on the special dividend to the Crown," a spokesman said.

At the time of the results, Kiwibank chief executive Paul Brock said the decision to withhold cash at the time of the partial sale reflected the new shareholders' views of Kiwibank's capital position and upcoming investment plans.

"I think their view was given the amount of investment that was going on in the bank it was probably worth popping in a bit more [cash], and obviously that also means that the bank can continue to grow," Brock said.

 - Stuff