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The history of TSB is stitched into the fabric of Taranaki folklore, the homegrown tale of the minnow bank making its way in an industry known for its big fish.

But its 172-year legacy in the region is not a fait accompli, after the bank’s sole owner, Toi Foundation, did not rule out its sale as part of future plans to help realise its own ambitious goals.

TSB is one of New Zealand’s oldest banks, and one of its smallest.

By way of perspective, its before tax profit this year was $53.5 million, while Australian-owned ASB, one of the four major players in Aotearoa, recently announced earnings of $1.42 billion.

To its credit, TSB has never pitched itself as an entity which can mix it with the big banks, and to some extent, that’s part of its charm.

Associate Professor Claire Matthews, of Massey Business School, says considering the sale of TSB could lead to a series of consequences for Toi Foundation, and the bank itself. 

And while it might be king of customer service, if its slew of industry awards is anything to go by, its ability to grow is flummoxed by a lack of capital, and the costs associated with increased regulatory compliance.

TSB has already been in hot water after being ordered to pay $3.5m following a High Court judgment related to four breaches of anti-money laundering laws last year.

Its 2022 annual report outlined a $136m spend to upgrade its systems, technology and product development as a way to get up to speed.

The “great reputation” of TSB is a major selling point to people, regardless of its size and performance, according to associate professor Claire Matthews, of Massey Business School.

She said this was directly related to the fact TSB was one of only a few banks in Kiwi ownership, but also because of its intrinsic tie to Taranaki.

This local loyalty was one of the factors Matthews highlighted as being a real risk to Toi Foundation, should it ever decide to pursue the idea of selling TSB.

She said the foundation was established off the back of its ownership of TSB, so flicking it off wholesale would likely result in “community backlash”.

Less vitriol might accompany the idea of a slice of shareholding being cashed in, but Matthews said it would still need to “put a good story around that” regarding its reason to sell off what amounts in Taranaki to the family silver.

Toi Foundation made history in 2022 when it gave out $22m in community grants – a record number. 

When asked directly about its ongoing ownership of TSB Bank at its recent annual general meeting, Toi Foundation chairman Chris Ussher was quick to pay tribute to what owning the bank had meant to the trust’s ability to be in a position to make a record-setting $22m in community grants this year.

“TSB has been, and remains, a key part of the foundation.”

The current reality, at least on paper, is that Toi Foundation’s only other asset, Fisher Funds, of which it owned a 66% stake, contributed more than four times its annual revenue, when compared to the bank.

In 2022, $56.1m in income was attributed to Fisher Funds, with $12.5m coming courtesy of TSB’s dividend.

And Fisher Funds’ ability to generate further riches for the foundation in future years was recently boosted by its acquisition of Kiwi Wealth.

Although the deal is still subject to Overseas Investment Office approval, pundits described it as a “game-changer” for Toi Foundation in terms of the amounts of cash which will eventually flow back into the region.

Revenue from its 66% stake in Fisher Funds is benefiting Toi Foundation, and the wider Taranaki community at the moment, to the tune of millions of dollars.

Ussher told the meeting the foundation’s investment strategy had worked to date, and the money provided by way of TSB’s yearly dividend had provided the “bedrock” from which it could move to acquire Fisher Funds in the first place.

He said there were no plans to divest from its interest in the bank, but there was no clear rejection of the idea either.

“I also have to say though that obviously, like any other trust, if the opportunity were to arise, we would need to consider it.”

The bank sale process itself is complex, requiring 75% support from sitting trustees, feedback from the community and changes to the bank’s trust deed, which then needed the rubber-stamp of the Minister of Finance.

But if Fisher Funds’ planned buy-up of Kiwi Wealth is a game-changer, the amount of pūtea selling the bank could provide Toi Foundation would be unprecedented.

Based on recent figures she had seen, Matthews pitched $700m as TSB’s minimum value, but could not rule out it heading toward the billion-dollar mark either, although she was hastened to add it was always difficult to set a clear asking price for banks, due to the variety of factors.

The biggest one was the existence of an interested buyer, she said.

While any deal would be financially beneficial to Toi Foundation, it could be “detrimental” to the bank’s future, Matthews said.

Toi Foundation chief executive Maria Ramsay says the trust has a clear commitment to staying in Taranaki. 

Any sale, particularly to an offshore buyer, might see TSB lose the allure of local ownership, and potentially turn off potential, and current, customers.

And as TSB’s perennial problem has been a lack of capital to grow, it only had its sole owner to turn to for help.

“It’s a catch-22,” she said.

Matthews said one issue on the horizon which could clip Fisher Funds’ wings in terms of revenue, and therefore its dividend to Toi Foundation, was the talk within the sector about whether regulation needed to be introduced regarding fees charged by KiwiSaver providers.

Matthews said fees were often the primary source of income to any reduction to what they charged now, would have obvious flow on effects to shareholders.

As part of quashing any idea a bank sale was on its current agenda, Ussher said the dropping of TSB from the trust’s name, during its 2021 rebranding, was not about distancing itself from the institution, but to better reflect the organisation and its goals to turn Taranaki into a thriving, inclusive and equitable place to live.

The ongoing commitment to the region goes without saying for Toi Foundation chief executive Maria Ramsay too.

“We’re proud of being in Taranaki, that’s not going to change.”

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