TSB is one of New Zealand’s few remaining independent, locally owned banks. It has a long Taranaki history, a run of recent Canstar awards, and — as of 2026 — a proposed merger that would reshape it.
This guide sets out the facts a New Zealander would want before opening an account or moving savings across: who owns TSB, what its main products do, how your interest is taxed, how your deposits are protected, its regulatory record, and where the Heartland deal stands.
It is general information, not financial advice or a recommendation.
Costs, fees and borrowing responsibly
Rates in NZ typically run ~7%–20% p.a. depending on your credit profile, the amount and the lender.
Who owns TSB, and why that matters
TSB traces back to 1850, when it opened as the New Plymouth Savings Bank. It was renamed the Taranaki Savings Bank in 1964 and became TSB Bank in 1989.
Since 1988 it has been owned by the Toi Foundation (formerly the TSB Community Trust), a charitable trust that holds the bank through Toi Foundation Holdings Limited. The foundation also owns a majority stake in Fisher Funds.
This is what people mean when they call TSB “profit for purpose.” Because there is no overseas parent taking dividends offshore, TSB’s profits stay in New Zealand, and each year a portion of after-tax profit flows to the Toi Foundation, which distributes grants across the Taranaki region.
In scale terms, TSB is a smaller player — around 1.4% of the market by assets, roughly the seventh-largest bank in the country. That is worth keeping in perspective: it is genuinely local and independent, but it is not one of the big four.
Award-winning everyday accounts
TSB was named Canstar’s 2026 Bank of the Year for Everyday Banking, and it also holds Bank of the Year for Credit Cards for the fourth year running. Canstar’s everyday award weighs products, price, features and customer satisfaction together.
The products behind that recognition are straightforward:
Connect Plus is the everyday transaction account. It has no monthly fee and unlimited electronic transactions. Like most transaction accounts, it does not pay interest.
WebSaver is an on-call savings account that pays interest on the whole balance with no withdrawal conditions attached. The rate moves with the market, so check the current figure before relying on it.
Low Rate Mastercard is a credit card built around a low purchase interest rate — 11.95% p.a. at the time of writing — which suits people who occasionally carry a balance rather than chasing rewards points.
Reference sources
- Financial Markets Authority — consumer credit and the CCCFA: fma.govt.nz
- Reserve Bank of NZ — retail interest rates on lending: rbnz.govt.nz
- Sorted — borrowing, debt and comparing loans: sorted.org.nz
- Banking Ombudsman Scheme — complaints about banks and lenders: bankomb.org.nz
One practical note: TSB updated its general and overdraft terms in mid-2026, changing how interest and some fees are calculated on certain accounts. Rates and fees change often, so always confirm the current numbers on TSB’s own site rather than a third-party summary.
Logging in and staying secure
Online banking access uses a two-part login: a Customer ID and a password you set. Beyond that, TSB applies the security layers now standard across NZ banks.
Multi-factor authentication (MFA) — an extra check on top of your password — sends a one-time code to your registered phone for higher-risk actions such as large payments. In plain terms, knowing your password alone isn’t enough to move your money.
The mobile app supports fingerprint and face login on supported devices, and the desktop login offers an on-screen keyboard option to reduce the risk from keystroke-logging malware. Repeated failed login attempts temporarily lock online access as a protective measure.
For the exact login steps, the current security code process, or if you’re locked out, use TSB’s official app, website or phone line — and treat any email or text asking for your full login details as a likely scam.
How your savings are taxed: RWT, PIE and the PIR
This is where many savers leave money on the table, so it’s worth explaining plainly.
Interest you earn is normally taxed through Resident Withholding Tax (RWT) — tax the bank deducts before paying you, at a rate tied to your income. For higher earners that can be 33% or 39%.
A Portfolio Investment Entity (PIE) is a type of investment structure with its own tax rules. Money held in a PIE is taxed at your Prescribed Investor Rate (PIR), and the top PIR is capped at 28%. So a high earner using a Term PIE instead of a standard term deposit can pay less tax on the same interest — without taking on extra risk.
TSB offers its fixed-term savings both as standard term deposits and as Term PIE options, typically from around a $1,000 minimum. The catch to watch: you must declare the correct PIR. Get it wrong and you can end up with a tax bill or a shortfall to square up with Inland Revenue.
If you want to understand the wider rate bands first, see our guide to NZ tax rates, and if this money is really earmarked for retirement, weigh it against your KiwiSaver strategy.
Is your money safe? Deposit protection explained
New Zealand now has a formal safety net. The Depositor Compensation Scheme (DCS) went live on 1 July 2025 and is run by the Reserve Bank of New Zealand.
Under the DCS, eligible deposits are protected up to $100,000 per depositor, per licensed deposit taker, if a bank fails. Cover is automatic — there’s nothing to sign up for — and it applies to standard products like transaction, savings and term deposit accounts.
What the ANZ home loan calculator uses — and what it leaves out
You enter
- Loan amount — the price minus your deposit.
- Loan term — often 25–30 years (30 is ANZ’s maximum).
- Interest rate — typed in manually; it isn’t pulled in live.
- Repayment frequency — weekly, fortnightly or monthly.
It usually doesn’t include
- Legal, valuation and other set-up costs
- Any Low Equity Premium on a deposit under 20%
- Home and contents insurance
- Rates, maintenance and body corporate levies
Stress-test tip: run the numbers again at a rate 2% higher than today’s. If the repayments still fit your budget, you have a buffer if rates rise.
Separately, TSB carries an investment-grade long-term credit rating (A− from Fitch as at late 2024), which is one external signal of financial strength. A credit rating is an independent agency’s assessment of how likely an institution is to meet its financial obligations.
TSB’s regulatory record
A neutral guide should be candid about this. TSB has had two notable responsible-lending issues.
In 2024, the High Court ordered TSB to pay a $2.47 million penalty after it overcharged around 42,000 credit-contract customers roughly $3.6 million between 2015 and 2021. TSB had self-reported the problem, and the court noted its cooperation and remediation. It was the first pecuniary penalty ever issued under the Credit Contracts and Consumer Finance Act (CCCFA).
In June 2026, the Commerce Commission secured settlement agreements with ASB, TSB and Nelson Building Society over responsible-lending failures. TSB’s related to insufficient processes and governance around its overdraft products; some breaches resulted in customers being overcharged, and affected customers are to be remediated. The Commission signalled it would pursue penalties through the courts.
Context matters here: from 1 July 2026, oversight of the CCCFA passed from the Commerce Commission to the Financial Markets Authority (FMA), which is now New Zealand’s single conduct regulator for lending, with a new licensing regime for lenders. If you’re comparing lenders more broadly, our personal loans guide covers what responsible lending means for borrowers.
The proposed Heartland merger
The biggest change on TSB’s horizon is a merger.
In June 2026, Heartland Group Holdings (listed on the NZX and ASX) signed a conditional agreement to buy all TSB shares from the Toi Foundation for $620 million. Heartland Bank and TSB would then merge into a single bank called TSB Heartland Bank, combining Heartland’s specialist products — reverse mortgages, livestock and asset finance — with TSB’s everyday accounts, cards and branches.
The deal is targeting completion in December 2026, but it is conditional. It requires community consultation with Taranaki residents, Heartland shareholder approval, and New Zealand and Australian regulatory approvals.
It is also contested: the Taranaki Community Accountability Society has filed an application in the High Court challenging the Toi Foundation trustees over the proposed sale. In other words, this is a proposal, not a done deal.
For depositors, one detail is worth planning around now. While TSB and Heartland remain separate banks, your deposits are protected up to $100,000 at each of them. If they become a single deposit taker, the $100,000 DCS limit would apply once across the combined entity.
The bottom line
TSB is a long-established, independent, New Zealand-owned bank with well-regarded everyday accounts and a genuine local-community model. It has a real regulatory record around historical lending compliance, and its future ownership is in the middle of a proposed — and challenged — merger with Heartland.
If TSB is on your shortlist, the sensible steps are to check current rates and fees directly, confirm which accounts are DCS-protected, and keep an eye on the merger’s progress. For repayment planning on any lending, our home loan calculator guide and our overview of term deposit rates are useful next reads.
Disclaimer: This article is general information about TSB Bank and New Zealand banking, not financial advice, and it is not an endorsement or recommendation to open, switch or close any account. Rates, fees, products and the proposed merger can change. Do your own research and consider advice from a licensed financial adviser before making decisions. For free, independent guidance see Sorted (sorted.org.nz); for deposit protection details see the Reserve Bank (rbnz.govt.nz/dcs); and for the conduct regulator see the FMA (fma.govt.nz).
New Zealand’s mortgage lending guardrails
Set by the Reserve Bank. LVR settings were eased on 1 December 2025; DTI rules have applied since 1 July 2024.
| Rule | Owner-occupiers | Investors |
|---|---|---|
| LVR “speed limit” | Up to 25% of a bank’s new lending can be above 80% LVR (deposit under 20%). | Up to 10% of new lending can be above 70% LVR (deposit under 30%). |
| DTI “speed limit” | Up to 20% of new lending can go above a 6× debt-to-income ratio. | Up to 20% of new lending can go above a 7× debt-to-income ratio. |
These are limits on each bank’s total new lending, not hard caps on you personally. New builds, Kāinga Ora First Home Loans, refinancing and bridging finance are generally exempt. Banks also run their own affordability and stress tests. Settings change — check the Reserve Bank for the current position.
Frequently asked questions
Is TSB a New Zealand-owned bank?
Yes. TSB has been owned since 1988 by the Toi Foundation, a Taranaki-based charitable trust, and it is one of the few sizeable banks in New Zealand that is fully locally owned and independent.
Has TSB won any recent banking awards?
Yes. It was named Canstar’s 2026 Bank of the Year for Everyday Banking, and it has held Canstar’s Bank of the Year for Credit Cards for four consecutive years.
Does the Connect Plus account have monthly fees?
No. Connect Plus is TSB’s everyday transaction account with no monthly account fee and unlimited electronic transactions. As a transaction account, it does not pay interest.
How does a Term PIE reduce tax on my savings?
Standard interest is taxed at your Resident Withholding Tax rate, which can be 33% or 39% for higher earners. A Term PIE is taxed at your Prescribed Investor Rate, which is capped at 28% — so higher earners can keep more of the same interest. You must declare the correct rate.
Is my money at TSB protected if the bank fails?
Eligible deposits are protected up to $100,000 per depositor under the Depositor Compensation Scheme, which has been in force since 1 July 2025 and is run by the Reserve Bank of New Zealand.
What is happening with the TSB and Heartland merger?
Heartland Group Holdings has agreed, subject to conditions, to buy TSB for $620 million and merge it with Heartland Bank to form TSB Heartland Bank, targeting completion in December 2026. It still needs community consultation, shareholder and regulatory approvals, and it faces a legal challenge, so it is not yet finalised.
Has TSB had any regulatory issues?
Yes. In 2024 the High Court imposed a $2.47 million penalty over historical overcharging that TSB self-reported, and in June 2026 TSB settled with the Commerce Commission over responsible-lending process failures, with affected customers to be remediated.
Related guides: BNZ Term Deposit.
