Featured Product

    RBNZ Releases Materials and Response to Submissions on Capital Review

    December 19, 2019

    RBNZ released background materials and papers on the final decisions on the comprehensive review of the capital adequacy framework for locally incorporated registered banks in New Zealand, along with its response to submissions on the fourth and final consultation paper on the capital review. To account for the transitional impact, the first changes resulting from the capital review will come into effect on July 01 2020 and the last on July 01, 2027. The seven-year transition period allows a longer timeframe to meet new capital requirements. Also, RBNZ has decided to implement the change in internal ratings-based scalar from October 01, 2020 and output floor from January 01, 2021. This ensures that the playing field between the internal and standardized approach banks is leveled sooner rather than later.

    The final decisions in the capital review included a range of changes to the fourth paper (December 2018) proposals. Many of these changes reflect feedback received during the submission process and points raised in stakeholder meetings with a diverse range of groups. The final decisions include more flexibility for banks on the use of specific capital instruments, a more cost-effective mix of funding options for banks, more transparency in capital reporting, and a lesser increase in capital for the smaller banks consistent with their more limited impact on society should they fail. All of the banks identified as domestic systemically important banks or D-SIBs (ANZ, ASB, BNZ, and WNZL) agreed with the proposed D-SIB buffer of 1%, noting that this calibration aligns with the approach of APRA. However, RBNZ determined that a more appropriate D-SIB buffer for the New Zealand context would be 2%. This is on the basis that D-SIBs in New Zealand are relatively more systemic than they would be overseas, largely due to the high level of concentration in the banking sector.

    Furthermore, any legislative changes to the crisis management regime in New Zealand are not likely to come into effect for several years. RBNZ has not yet determined whether establishing a bail-in framework would be desirable in the New Zealand context, even if provided with the legislative authority to do so. If RBNZ were to establish a bail-in framework, it would likely not become effective for several years after the legislative authority is provided. If a bail-in framework were to exist, it should not be assumed that it would be appropriate to use it in all resolution scenarios. If a bail-in framework were to exist, its effectiveness could not be evaluated until after it is executed (bail-in frameworks remain untested internationally).

    As part of the next steps, RBNZ will consult on Exposure Drafts of the capital chapters in the Banking Supervision Handbook, to give effect to the 2019 reforms. It is envisaged that the Exposure Drafts will be ready for consultation by April 01, 2020. An indicative date for the end of the consultation on the Exposure Drafts is June 01, 2020, with the revised chapters coming into effect on July 01, 2020. The transition period will begin on July 01, 2020. An indicative transition timeline is given in Appendix 2. RBNZ will consult on the details of the Escalating Supervisory Response policy and operationalizing the countercyclical capital buffer, or CCyB, in 2020.


    Related Links

    Keywords: Asia Pacific, New Zealand, Banking, Capital Adequacy Framework, Capital Review, Basel III, Regulatory Capital, Systemic Risk, Resolution Framework, RBNZ

    Featured Experts
    Related Articles

    UK Authorities Consult on Implementation of Basel 3.1 Standards

    The UK authorities have published consultations with respect to the Basel requirements for banks. The Prudential Regulation Authority (PRA) published the consultation paper CP16/22 on rules for the implementation of Basel 3.1 standards.

    November 30, 2022 WebPage Regulatory News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News

    FSB and NGFS Publish Initial Findings from Climate Scenario Analyses

    The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.

    November 15, 2022 WebPage Regulatory News

    FSB Issues Reports on NBFI and Liquidity in Government Bonds

    The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.

    November 14, 2022 WebPage Regulatory News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News

    EU Finalizes Rules Under Crowdfunding Service Providers Regulation

    The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.

    November 08, 2022 WebPage Regulatory News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8597