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A STATE-owned Kiwi Bank has been supported by key Coalition negotiators and is expected to get the go-ahead from the cabinet in the next few weeks.
An "in principle" deal had been hammered out between Finance Minister Michael Cullen and Deputy Prime Minister Jim Anderton for a bank, run by New Zealand Post through its branch network, with Government financial assistance if needed.
The bank, a key plank of Alliance Party policy, will open for business next year.
A crucial roadblock to the bank was cleared when Dr Cullen dropped his blanket objection to any extra Government investment.
That has opened the way for NZ Post to raise debt and pay the Government a lower dividend to finance set-up costs of $80 million.
The exact nature of the Government's financial help had not been settled.
Dr Cullen told National Radio there was an issue over the level of capital injection needed and where that would come from "because as I have indicated in the past I am reluctant in effect for that to come directly out of the Government's coffers.
In earlier statements he had ruled out any equity injection or continuing financial support.
Mr Anderton said a public asset "of very significant value" would be built up. He said the bank would in time be worth more than the rest of NZ Post, although it was expected to make a loss in the early stages.
He hoped a future Government would not sell it but he could not "guarantee posterity." He had said previously that the bank would offer the full range of services.