Kiwibank pushes to stop TSB/Heartland merger, as community opposition fails

Author: Jenée Tibshraeny,
Publish Date: Tue, 25 Aug 2026, 1:46pm

A High Court judge has delivered a decision on an interim injunction application aimed at impeding the sale of TSB to Heartland.

Kiwi Group Capital is making an eleventh hour push for TSB’s owner to consider its “superior” offer to buy the bank, before selling it to Heartland Group Holdings.

The renewed call follows a High Court judge dismissing a Taranaki community group’s bid to stall the sale of their local bank.

It also comes the day before the trustees of the charitable trust that owns TSB, Toi Foundation, are due to vote on progressing the Heartland deal.

In June, Toi agreed to sell TSB for $620 million to NZX/ASX-listed, Heartland. The proposal was for Toi to reinvest in the bank so that it had a 17.5% shareholding.

However, on August 18, Kiwi Group Capital - the Crown company that owns Kiwibank - went public with the fact it was interested in buying TSB.

Today, Kiwi Group Capital chairman David McLean doubled down on this.

“We have communicated our interest in TSB,” he told the Herald.

“We have a superior proposal ready for the trustees to consider and believe Kiwibank is the better partner.

“Ultimately it is now a decision for the trustees to make, taking into consideration the community response and the support for the various options in front of them.”

At least 75% of Toi’s trustees need to approve the Heartland deal for it to progress.

If they do, Heartland shareholders will vote on the proposal on September 30.

Provided the sale clears the appropriate regulatory hurdles, it will take effect in December.

Community opposition carries no legal weight

Coming back to the court case, High Court Justice Andru Isac dismissed Taranaki Community Accountability Society Incorporated’s urgent application for an interim injunction to stall the sale of TSB to Heartland.

In his judgment, made public today, Isac said the group’s claims were “legally and factually weak” and in some respects “untenable”.

The group accused Toi of providing outdated, misleading and one-sided information during a consultation process it was required to undertake with Taranaki residents under its trusts deed.

Making its case in court last Thursday, the group said Toi had engaged with other potential buyers, but entered into exclusive talks with Heartland in November.

It wanted Toi to put various options to the community for how it could diversify its investments, beyond selling TSB to Heartland.

Toi disagreed and argued that in any case, the group wasn’t a beneficiary of the trust and had no legal jurisdiction to intervene without the Attorney-General’s help.

Justice Isac sided with Toi, saying the group “failed to establish a legal basis on which it has standing to bring its claim, or jurisdiction for the court to grant the relief it seeks”.

This aside, Justice Isac said Toi gave the community the right information. He noted there was a difference between Toi fulfilling its obligations and the group getting all the information it wanted to assess the commercial merits of the transaction.

Justice Isac declined the group’s request for Toi to cover its legal costs. While he recognised the group had pursued something important to the community with little money, he concluded it had “not established a seriously arguable case”.

Stepping back and considering the “overall interests of justice”, Justice Isac said it was rational for Toi to consider selling TSB.

“While it is understandable that a significant proportion of the Taranaki community would prefer that the bank remains wholly owned by the foundation, there is a financial trade-off from continuing ownership,” he said.

“These competing and difficult questions are matters the Community Trusts Act and executive government have given to the trustees to resolve.”

Jenée Tibshraeny is the Herald‘s Wellington business editor, based in the Parliamentary Press Gallery. She specialises in government and Reserve Bank policymaking, economics and banking.