April 08, 2019

RBNZ launched a consultation on the framework for identifying the domestic systemically important banks (D-SIBs). The consultation paper seeks views on the proposed indicator-based approach for identifying D-SIBs. The consultation closes on May 31, 2019.

As per the proposed new capital adequacy proposals of RBNZ, D-SIBs would be subject to a capital surcharge vis-à-vis smaller banks. The method proposed for identifying D-SIBs in this consultation paper aligns with international best practice as recommended by the Basel Committee. The method uses an indicator-based approach across four dimensions: size, interconnectedness, substitutability, and complexity of banks. The banking supervision handbook BS 1 defines “systemically important banks” as banks with external liabilities exceeding NZD 15 billion. Once a bank exceeds this threshold, it has to incorporate this framework locally. After the consultation has closed, RBNZ will publish the submissions it has received, a summary of the feedback, further impact analysis, and its decision on how to proceed with the proposed D-SIB framework. 

 

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Keywords: Asia Pacific, New Zealand, Banking, D-SIBs, Regulatory Capital, Basel III, Systemic Risk, RBNZ

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