WELLINGTON, New Zealand -- Citibank New Zealand said it is funding an expansion of mortgage lending through three issues of retail bonds.

Bonds with one-year and three-year maturities are paying 6.75% annually, while a five-year bond offers 7%. Interest is payable quarterly.

The one-year bond will be limited to $5.5 million, while the other issues will be open, Citibank said.

Into the Mainstream

A $27.5 million wholesale component of the issue was tendered last week to institutions and was oversubscribed, the Citicorp affiliate said. The lead manager of the issue is CS First Boston.

Citibank New Zealand is seeking to broaden what has been perceived as a niche mortgage business. "This should take us into the mainstream of New Zealand banking," said Brian Clayton, chairman of Citibank Australia.

Citibank's mortgage business in New Zealand has grown 300% over the past 2 1/2 years, said New Zealand chief executive Richard Wilks. He said the bank expects to continue relying on an agent network and will not be using the new funds to open retail branches.

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