Featured Product

    RBNZ Releases Results of the 2017 Stress Test of Major Banks

    July 09, 2018

    RBNZ published the results of the 2017 stress tests of major banks. The detailed results from the 2017 stress test exercise involve the four largest banks in New Zealand: ANZ Bank New Zealand, ASB Bank, Bank of New Zealand, and Westpac New Zealand. RBNZ also published its approach for using the stress tests to monitor the stability of the financial system.

    Outcomes from the test suggest that the four banks would be able to maintain capital levels above their minimum requirements during these scenarios. Repricing actions to maintain relatively stable net interest income and low operating expenses mean that these banks would be able to offset large losses on their credit portfolios and from the misconduct event with their underlying earnings. There are, however, uncertainties around the magnitude of losses banks may face in a real downturn scenario and the extent to which banks would be able to restore their interest margins. As a result, the outcomes remain sensitive to the modeling assumptions used in the test. The stress tests modeled a severe macroeconomic downturn scenario and an operational risk event related to mortgage lending misconduct.

    In feedback on their performance in the 2017 test, RBNZ encouraged further improvements in banks’ ability to assess how stress test results vary depending on modeling assumptions, and emphasized the importance of providing sufficient context around these sensitivities when discussing stress test outcomes with senior management and directors. Stress test results are also an input to the calibration of capital requirements, which are currently under review. RBNZ expects banks to be well-capitalized, so they can continue providing credit to the economy even under severe stress scenarios.

     

    Related Links

    Keywords: Asia Pacific, New Zealand, Banking, Stress Testing, Banking Supervision, 2017 Stress Test, RBNZ

    Featured Experts
    Related Articles
    News

    EU Amends CRD4 and CRD5 as Part of Capital Markets Recovery Package

    EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.

    February 26, 2021 WebPage Regulatory News
    News

    EU Committee Recommends Systemic Risk Buffer of 4.5% in Norway

    The Standing Committee of the European Free Trade Association (EFTA) recommended that a systemic risk buffer level of 4.5% for domestic exposures can be considered appropriate for addressing the identified systemic risks to the stability of the financial system in Norway.

    February 25, 2021 WebPage Regulatory News
    News

    PRA Clarifies Approach to Onshoring of Credit Risk Rules for UK Banks

    In a recent statement, PRA clarified its approach to the application of certain EU regulatory technical standards and EBA guidelines on standardized and internal ratings-based approaches to credit risk, following the end of the Brexit transition.

    February 25, 2021 WebPage Regulatory News
    News

    FSB Sets Out Work Priorities for 2021

    In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021.

    February 25, 2021 WebPage Regulatory News
    News

    EU Publishes Corrigendum to Revised Capital Requirements Regulation

    EU published, in the Official Journal of the European Union, a corrigendum to the revised Capital Requirements Regulation (CRR2 or Regulation 2019/876).

    February 25, 2021 WebPage Regulatory News
    News

    ESAs Issue Statement on Application of Sustainability Disclosures Rule

    ESAs published a joint supervisory statement on the effective and consistent application and on national supervision of the regulation on sustainability-related disclosures in the financial services sector (SFDR).

    February 25, 2021 WebPage Regulatory News
    News

    EC Consults on Crisis Management and Deposit Insurance Frameworks

    EC published a public consultation on the review of crisis management and deposit insurance frameworks in EU.

    February 25, 2021 WebPage Regulatory News
    News

    HKMA Enhances Loan Guarantee Scheme to Alleviate Pressure on SMEs

    HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.

    February 24, 2021 WebPage Regulatory News
    News

    EBA Proposes Standards for Supervisory Cooperation Under IFD

    EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.

    February 24, 2021 WebPage Regulatory News
    News

    BoE Addresses Banks in Scope of First Resolvability Assessment

    BoE issued a letter to the CEOs of eight major UK banks that are in scope of the first Resolvability Assessment Framework (RAF) reporting and disclosure cycle.

    February 24, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6629