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4 reasons why selling part of Kiwibank could do more harm than good

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To sell or to not sell – that’s the query that various governments have asked themselves since Kiwibank was established in 2002. Now it’s the turn of the present coalition led by the National Party. investigate the state ownership of the bank.

The ministers have asked the Kiwibank board exploring expansion opportunities for the bank, potentially including investment from private sector or government entities.

This got here just two years into the previous Labour government. 2.1 billion NZ dollars spent ensuring full control over Kiwibank and is part of the coalition’s efforts to extend public sector productivity, growth and efficiency.

The latest try and help the bank grow while retaining full New Zealand ownership must even be seen within the context of the recent Commerce Committee meeting draft report on banking services, wherein Kiwibank was identified as a market distorter.

If properly capitalized, the report says, Kiwibank should make New Zealand banking more competitive. Supporters (*4*)partial privatization or a public listing of some Kiwibank shares agree. They also argue that this is able to strengthen the stock market and funnel profits back to New Zealanders.

The government has not yet proposed anything specific. But any plans to partially privatise Kiwibank so soon after the state effectively rescued it deserve serious scrutiny. Such a move could do more harm than good, for 4 predominant reasons.

1. Bank concentration is normal

The traditional concentration of the banking sector in New Zealand and the dominance of the market by the 4 large banks headquartered in Australia are unlikely to vary any time soon.

But a concentrated banking sector is just not bad and even abnormal and exists in lots of countries. For example, three banks within the Netherlands currently they hold 84% of total banking assetsThe smallest, ABN AMRO, is larger than all New Zealand banks combined.

Still, the Dutch are less vocal in regards to the lack of competition and the high profit margins that include it. There is an acceptance, especially amongst EU banking regulators, that the choice of more small banks is just not a panacea.

Small banks in EU countries akin to Spain and the Netherlands have failed more often than large ones. What’s more, innovations in banking and finance come mainly from large banks.

Relative scale: The smallest of the three largest banks within the Netherlands, ABN AMRO, is larger than all of the banks in New Zealand combined.
Getty photos

2. Capital Investment and Growth

The notion that more capital will promote growth puts the cart before the horse. As fans of Shark Tank or Dragons’ Den investment shows know, only firms with a compelling value proposition attract funding.

Kiwibank’s track record leaves much to be desired. For example, the press release accompanying its 2023 results cited the launch of Apple Pay as a significant highlight. Other banks began offering the service in 2016.

Moreover, at 7.5%, the bank’s return on equity is the bottom among the many six largest banks. And its core capital ratio has not increased since 2018, making it harder to fulfill the Reserve Bank’s rising capital requirements.

Following a small capital injection of $225 million last yr, Kiwibank CEO Steve Jurkovich said the bank’s loan portfolio could increase significantly. According to the Reserve Bank financial strength panelHowever, Kiwibank’s net loans and advances grew by 2.7% and 1.8% within the quarters ending December 2023 and March 2024, respectively.

This was not significantly different from growth in previous quarters since 2018, which averaged 2.3%. In other words, Kiwibank’s own experience shows the issues within the equity-before-growth narrative.

3. Concealed foreign possession

In a really perfect world – with a deep and liquid capital market and a big, growing and productive economy – having a competitive bank that’s 100% owned by New Zealand residents might work well.

In reality, New Zealand doesn’t have these features. In fact, Kiwibank’s ownership restrictions – which prevent it from being floated or sold directly – have resulted within the previous owners transferring their shares to the federal government.

Partial privatization would due to this fact require selling shares at a big discount. And as sale of Kiwi Wealth to Fisher Funds in 2022 suggests that it could ultimately be financed by foreign private capital.

This could be achieved through a leveraged buyout, where an overseas private equity firm lends large sums of money to, for instance, a KiwiSaver fund to purchase shares. Technically, the KiwiSaver fund could be a 100% New Zealand company that owns shares in Kiwibank. However, this ownership could be largely formal.

The New Zealand owner would pay a high rate of interest to the private equity firm. And it is probably going that the private equity firm would wish to break up Kiwibank to scale back costs and improve efficiency.

By comparison, the present setup – 4 dominant banks owned by parent banks in a geographically and culturally close country – is just not that bad.

4. Unintended consequences

Finally, there may be the problem of popularity and moral hazard. Investors could be skeptical if Kiwibank were partially privatized, as history shows that its ownership appears to be depending on the present government.

Given the uncertainty, investors may buy stocks which might be trading at a deep discount or if the stock offers a high yield – which is strictly what private equity firms require.

In turn, that could lead the bank to tackle an excessive amount of risk, which creates disruption that nobody wants. Buyers might also desire a guarantee that they’ll return the shares to the federal government if the bank doesn’t do well.

Rather than rush into partial privatisation, Kiwibank should deal with strengthening its capital base, improving its performance and establishing a transparent track record of growth and innovation.

Only then should any change of ownership be considered. The path to a more competitive banking sector in New Zealand requires patience, strategic planning and a sensible assessment of market conditions, not hasty structural changes.

This article was originally published on : theconversation.com
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Business and Finance

First black lottery operator

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Emmanuel Bailey


In a city that pulls thousands and thousands of individuals all over the world, Emmanuel Bailey’s success story began in Washington. He began from humble beginnings, growing up with a single mother and moving from rental to rental throughout town and the Washington, D.C., metropolitan area for many of his childhood. At the peak of the drug epidemic, he saw his hometown affected by crime and poverty, and when he returned from college, his town was considered the murder capital of the country. Yet despite these adversities, he all the time worked hard and looked to a brighter future – a super his mother instilled in him since he was a small child.

As Bailey began his journey to a brighter future, he realized that to achieve success, he needed to pursue a university education. Through these pursuits, he became the primary member of his family to attend and graduate from college. He enrolled at Eastern Kentucky University, earning a bachelor’s degree in business administration. While at EKU, he set out to realize the high level of success his mother expected of him in all areas. After graduating from EKU, he obtained an Executive MBA from the Business School. Robert H. Smith on the University of Maryland.

Emmanuel achieved early success within the financial sector. Over the following 25 years, he rose through the ranks, starting as a branch manager at Citizens Bank of Maryland and ending with vice chairman of Fannie Mae. These roles provided him with invaluable experience as a seasoned entrepreneur and leader. After all the pieces he had achieved at Fannie Mae, it was time to strike out on his own.

Seeing the potential within the lottery industry, Emmanuel founded an operations and management services company to run lotteries more efficiently and effectively. Key service providers (VSC) has management experience in all facets of the state lottery contract, including providing direct supervision and management of lottery agents, retail systems, implementation and maintenance of gaming equipment, and oversight of the performance of the central gaming system. He worked in various positions in state lotteries across the country to achieve real institutional knowledge of the ins and outs of the brand new industry he was entering. Combining his latest knowledge with business sense, he decided to win contracts with the most important names within the industry.

The lottery industry is amazingly competitive, and contracts are sometimes awarded to large national firms. However, as Emmanuel grew his business, hiring experienced staff and expanding VSC’s capabilities, he began to make a reputation for himself as a trusted and talented operator within the industry. He soon partnered with titans in the sector and eventually became the one black business owner to operate a state lottery in your entire United States, in his home “state” of Washington.

But his success didn’t end there.

Bailey continued to hone his expertise, turning VSC right into a multi-million dollar company with over 100 employees. He was honored with the 2020 North American Association of State and Provincial Lotteries (NASPL) Powers Award, which he won based on nominations from the DC Lottery itself. In its nomination, the District of Columbia said Emmanuel “is far from a stereotypical executive… and will ensure that the DC Lottery continues to operate every day and that our company remains profitable into the long-term future.” It continues to grow its business by opening a VSC office in Maryland and searching to expand its geographic reach.

Despite all his success, Emmanuel never forgot his family and his connection to his community. He stays deeply committed to giving back to DC communities. He has donated a whole lot of 1000’s of dollars to varied local DC-based organizations supporting programs comparable to school athletic and humanities departments, educational support and health care. He also served and continues to serve on the boards of many local organizations.

Now Emmanuel looks to the longer term. Always striving to enhance his business, Emmanuel works to enhance operations and improve the efficiency of the DC Lottery, while also giving back to the community and creating more opportunities for young children growing up in circumstances like his own. While his feet are firmly planted within the DMV, his ambitious and entrepreneurial spirit has his eyes on expansion into additional states. He says his best achievement, above all his other achievements, is that he helped his mother retire.


This article was originally published on : www.blackenterprise.com
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Business and Finance

David Shands and Donni Wiggins host the “My First Million” conference at ATL

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December is the birth month of David Shands and Donnie Wiggins, friends and business partners. Most people have fun by throwing a celebration. Others imagine it must be catered for. The chosen ones spend the day relaxing in peace and quiet.

Then there’s Shands and Wiggins.

The two decided that the best birthday gift can be to offer individuals with resources for generational wealth through a conference called “My first million”in Atlanta.

It’s a compromise between how their families and family members need to honor them and their desire to proceed to serve others. Shands acknowledges that almost all people won’t understand, and he unapologetically doesn’t expect them to.

“It’s not up to us to convince anyone why we do what we do,” admits Shands.

“I think everyone does what they do for different reasons, and I would just attribute it to a sense of accomplishment that I can’t explain to anyone else.”

He doesn’t need to clarify this to Wiggins because she understands his feelings. Wiggins has had a passion for serving others for so long as she will be able to remember.

“When I was in middle school, there were child sponsorship ads on TV featuring children from third world countries. I was earning money at the time and I asked my mother to send money,” she says BLACK ENTERPRISES.

She recalls how sad she felt for youngsters living in a world with so many opportunities, but at the same time going hungry. Her mother allowed her to send money, and in return she received letters informing her of their progress.

“It was very real to me,” Wiggins says, now admitting she’s undecided the letters were authentic. “I received a letter from the child I sponsored, a photograph and some updates throughout the 12 months. It was such a sense of being overwhelmed and it was something I felt so good about. I didn’t even tell my friends I used to be doing it.”

She carried this sense throughout her life, even when she lost every little thing, including her house, cars, and money. She still found ways to serve and give back, which is the basis of her friendship with Shands.

They each love seeing people at the peak of their potential, and that is what “My First Million” is all about. There can be no higher birthday gift for them than helping others create generational wealth.

What to expect during the “My First Million” conference.

They each built successful seven-figure empires, then train others, write books about it, and launch an acclaimed podcast Social proof.

Now they’re imparting that knowledge through the My First Million conference, an event for aspiring and existing entrepreneurs. Shands and Wiggins need to prove that being profitable is feasible and encourage people to bet on themselves.

“David and I, on paper, are not two people who should have made millions of dollars. Number one, we want (people) to see it,” Wiggins says. “Then we want them to actually get out of that room with practical and actionable steps.”

Both are clear: this just isn’t a motivational conference. This is a conference where people, irrespective of where they’re of their journey, will come away with clarity about their business and what they must be doing as CEOs. Shands and Wiggins want individuals who do not have a transparent marketing strategy or are considering starting a business to also attend the meeting.

“A few areas we will cover are inspiration, information, plan and partnership,” adds Shands. “We will give you 1-2-3 steps because some people get depressed and uninspired. Even if they know what to do, they won’t leave, go home and do it. So we have to really put something into their heads and hearts that they come away with.”

Sign up and enroll for My First Million Here. The conference will happen on December 13 this 12 months. but Shands and Wiggins say it definitely won’t be the last for those who miss it.


This article was originally published on : www.blackenterprise.com
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Business and Finance

Operation HOPE on the occasion of the 10th annual world forum

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Operation HOPE Inc. takes over Atlanta for the biggest game in the country dedicated to financial literacy and economic empowerment, Saporta reports.

The HOPE Global Forums (HGF) Annual Meeting 2024 strengthens the crucial link between financial education, innovation and community upliftment in hopes of finding solutions to the problems that stifle challenges around the world.

Organized by Operation HOPE founder John Hope Bryant, together with co-chairs Atlanta Mayor Andre Dickens and U.S. Ambassador Andrew Young, the forums, to be held December Sep 11 at the Signia Hotel, will have fun its 10th anniversary with three days of engagement discussions, observations and forward-looking presentations.

Under the theme “The Future,” Hope Bryant says attendees are looking forward to a “powerful moment in history.”

“Over the past decade, we’ve brought together great minds with daring ideas, servant leaders with voices for change, and other people committed to a brand new vision of the world as we realize it. “‘The Future’ is a clear call to action for leaders to help ensure prosperity in every corner of society,” he said.

The extensive program includes influential and well-known speakers who address business, philanthropy, government and civil society. Confirmed speakers include White House correspondent Francesca Chambers, media specialist Van Jones and BET Media Group president and CEO Scott M. Mills.

“John Hope Bryant and his team have been doing this for ten years, and every year HGF raises the bar,” Young said. “Discussions about the FUTURE are important not only for civil dialogue; they are also essential to bridging the economic divide and solving some of today’s most important problems.”

Atlanta is predicted to welcome greater than 5,200 delegates representing greater than 40 countries.

“I have long said that Atlanta is a group project, and through our partnership with HOPE Global Forums, we are inviting the world to join the conversation,” Dickens mentioned. “From home ownership and entrepreneurship to youth engagement and financial education, HGF will offer bold and innovative ideas to ensure a bright future for all.”

It coincided with the organization’s annual meeting launched one other path to enhance financial knowledge with HOPE scholarships. With three tiers of scholarships – HOPE Lite, HOPE Classic and HOPE Silver – clients could have access to free financial coaching and academic resources.


This article was originally published on : www.blackenterprise.com
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