RBNZ announced that the Cabinet decision to adopt the final measures resulting from the Reserve Bank of New Zealand (RBNZ) Act Review will see drafting commence for new legislation, which is to be known as the Deposit Takers Act. The new legislation will create a single regulatory regime for all bank and non-bank deposit takers (such as building societies and finance companies) and will introduce a new deposit insurance scheme. RBNZ will lead the implementation of the new Deposit Takers Act. Deposit insurance is being prioritized ahead of the rest of the Act coming into effect and is expected to be up and running in 2023.
The adopted measures conclude a comprehensive review of the RBNZ Act and build on reforms already confirmed to update the objectives and decision-making processes of RBNZ. The new Act will broaden and clarify the scope of RBNZ role, which has evolved significantly since RBNZ began prudentially regulating banks more than 30 years ago. It modernizes the regulatory processes and instruments and provides important new enforcement tools to help RBNZ to manage emerging issues. The Deposit Takers Act will enable RBNZ to:
- establish the depositor protection scheme, which will apply to all institutions that take deposits and will offer protection of up to $100,000 per depositor, per institution in the event of a failure
- introduce a single regulatory regime for non-bank deposit takers and banks, with standards as the primary tool for setting requirements
- strengthen director accountability with penalties for non-compliance
- broaden supervision and enforcement tools (including a new power to conduct on-site inspections)
- strengthen and clarify the crisis resolution framework
The ongoing reforms will also include a new process for setting lending restrictions, such as loan-to-value ratios. Drafting of the legislation is underway, with public consultation on an exposure draft expected later this year. The Bill is expected to be introduced into the House in late 2021 and receive Royal assent in early 2023. After the Bill is enacted, a significant work program over several years will be required to implement the new prudential framework for deposit-takers. The deposit insurance provisions of the Act are targeted for introduction in 2023, ahead of the rest of the Act coming into effect. Further public consultation is expected on the funding framework before the scheme is implemented.
Keywords: Asia Pacific, New Zealand, Banking, Deposit-Takers Act, Resolution Framework, Deposit Insurance Scheme
Previous ArticleFED Updates Forms for FR Y-9C and FR Y-14Q Reporting
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.