RBNZ Announces Further Regulatory Updates Amid Continued Crisis
RBNZ announced that it has signed the IBOR Fallbacks Protocol recently published by ISDA. RBNZ stated that, as a market participant, this is an important step for RBNZ to support an effective and efficient transition away from LIBOR and other key interbank-offer rates (IBORs) by the end of 2021. RBNZ also announced regulatory delays and other developments owing to the COVID-19 crisis; these announcements relate to the Capital Review implementation timing and consultation, loan-to-value ratio restrictions, and dividend restrictions.
RBNZ announced that it is further delaying the start of increases in bank capital until 2022 to allow banks continued headroom to respond to the effects of the COVID-19 pandemic and to support the economic recovery. This delay supports other actions that RBNZ has taken to cushion the initial economic blow of COVID-19 by promoting cash flow and confidence in the financial system. The changes mean the increase in the Prudential Capital Buffer will not begin until July 2022. RBNZ will reconfirm this timing near the end of 2021 and will consider making further amendments to the timing if the conditions warrant it. Other aspects of the capital reforms will proceed from July 01, 2021, including the new rules around capital instruments. Other regulatory announcements are as follows:
- In December 2020, RBNZ will consult about re-instating the loan-to-value ratio, or LVR, restrictions on high-risk lending, with effect from March 01, 2021. The loan-to-value ratio restrictions are used to reduce the risks to financial stability from higher-risk lending. The restrictions were removed in May to ensure that credit could flow and that they did not have an undue impact on the mortgage deferral scheme implemented in response to the COVID-19 pandemic.
- Restrictions on dividends and redeeming non-Common Equity Tier 1 (CET1) capital instruments that were put in place in April 2020 will be retained until March 31, 2021 or later, if required.
- RBNZ wrote to insurers advising that it has updated expectations on dividends. RBNZ expects that insurers will only make dividend payments if it is prudent for that insurer to do so, having regard to their own stress testing and the elevated risks in the current environment.
Related Links
Keywords: Asia Pacific, New Zealand, Banking, Insurance, Benchmark Reforms, Fallback Protocol, Basel, Regulatory Capital, LTV, Dividend Distribution, IBOR, COVID-19, ISDA, RBNZ
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
FSB List of Global Systemically Important Banks Remains UnchangedNext Article
ACPR Publishes Draft Version 1.0.0 of RUBA TaxonomyRelated Articles
EC Issues Regulation on Adjustments to K-Factor Coefficients Under IFR
The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).
OSFI Issues Results of Pilot on Climate Risk Scenario Analysis
The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.
ECB Issues Opinions on Green Bonds Standard and CRR Proposals
The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.
ESRB Explores Policy Response to Risks Arising from Digitalization
The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.
EU Authorities Address COVID-19 Reporting, MCD, and PSD2 Issues
The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.
FI Publishes Multiple Regulatory and Reporting Updates
The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.
BSP Tackles Aspects of Lending and Islamic, Open & Sustainable Finance
The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.
US Agencies Issue Regulatory Updates, FDIC Launches Tech Sprint
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
EBA Issues Guide on Bank Resolvability, Consults on Transferability
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).
MFSA Publishes CRD5 Updates and Supervisory Priorities for 2022
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0.
