Westpac keeps contract for core govt transactions

The local arm of Westpac Banking has kept its contract with the New Zealand government to provide core transactions, but will have to share peripheral services with its rivals.

Finance Minister Bill English and Economic Development Minister Steven Joyce yesterday announced Westpac was the winning bidder for the core contract, which accounts for $229 billion worth of credit and $219 billion of debit transactions each year. Westpac will continue to provide core transactional services, foreign exchange transactions, payment services and card services.

Other successful bids will see foreign exchange transactions provided by ANZ Bank New Zealand, ASB Bank, Bank of New Zealand and Citibank, payment services offered by ANZ, ASB, BNZ and Kiwibank, and card services from ASB, BNZ and Citibank, the ministers said in a joint statement.

Lower fees were negotiated and the all-of-government deal is expected to save about $120 million over the term of the contracts. Westpac’s core contract will run for another eight years, while the foreign exchange transactions, payments services, and card services are all three-year deals with two rights of renewal for a further three and two years respectively.

“The new contracts will deliver cost savings for government agencies and all New Zealanders,” English said. “They will ensure that banking services are fit for purpose and provide value for money.”

The deal is in line with the Ministry of Business, Innovation and Employment’s preferred option in a discussion paper preceding the tender for core transactional banking services currently under the master contract to be ring-fenced, along with up to seven other sub-categories, including school banking.

Government agencies have 93 Crown accounts, 78 departmental accounts and 175 trust accounts. The Treasury processes the biggest volume, with $245 billion of cash in and out each year.