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.

Pierre-Etienne Chabanel
Brings expertise in technology and software solutions around banking regulation, whether deployed on-premises or in the cloud.
Previous Article
FSB List of Global Systemically Important Banks Remains UnchangedNext Article
ACPR Publishes Draft Version 1.0.0 of RUBA TaxonomyRelated Articles
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.
BoE Sets Out Plan to Transform Data Collection from Financial Sector
BoE has set out a three-phased plan to transform data collection from the UK financial sector over the next decade.
BIS Issues Updates on Technology Initiatives on Cross-Border Payments
BIS recently made a couple of announcements with respect to the planned and ongoing work in the area of financial technology.
ESRB Updates List of Macro-Prudential Measures in February 2021
ESRB updated the list of national macro-prudential measures applied by each member state in the European Economic Area.
BoE Survey Shows Positive COVID Impact on Outsourced Banking Services
BoE has set out results of a survey on the impact of COVID-19 events on the use of machine learning and data science.
ECB Issues Opinion on Proposal to Regulate Crypto-Asset Markets in EU
In response to a request from the European Council and Parliament, ECB published an opinion on the proposed regulation on markets in crypto-assets.
APRA Announces Aggregate Committed Liquidity Facility for Banks
APRA announced the updated aggregate amounts for the 2021 Committed Liquidity Facility (CLF) established between the Reserve Bank of Australia (RBA) and certain locally incorporated authorized deposit-taking institutions that are subject to the Liquidity Coverage Ratio (LCR).
ECB and UK Authorities Agree on Post-Brexit Supervisory Cooperation
ECB published supervisory Memorandums of Understanding (MoUs) with UK as well as other European and non-European authorities.
EIOPA Outlines Strategic Supervisory Priorities for Insurance Sector
EIOPA identified business model sustainability and adequate product design as the two EU-wide strategic supervisory priorities.
US Agencies to Revise FFIEC 031, FFIEC 041, and FFIEC 051 Reports
After considering comments received on the November 2020 proposal, US Agencies (FDIC, FED and OCC) are proceeding with the proposed revisions to the reporting forms and instructions for Call Reports FFIEC 031, FFIEC 041, and FFIEC 051.