Featured Product

    RBNZ Issues In-Principle Decisions on Capital Requirements for Banks

    July 06, 2018

    RBNZ published its "in-principle decisions" on capital requirements for registered banks, as part of the review of capital adequacy in the New Zealand banking system. In this context, RBNZ also published a summary of submissions and its responses to the submissions on the consultation on calculation of risk-weighted assets (RWA). The consultation had closed on March 19, 2018.

    The components of RWA are credit risk, operational risk, and market risk. Qualifying banks are permitted to use models to calculate RWA, while the remaining banks use the standardized approach. After considering the feedback received, RBNZ has made the following in-principle decisions:

    • The capital framework will continue to permit qualifying banks to use internal models to estimate credit-risk-related RWA (the internal ratings-based, or IRB, approach), although there will be more restrictions on modeling
    • The IRB approach will not be permitted for any credit exposure with an external rating (for example, sovereigns, banks, some large corporates)
    • An RWA floor will be imposed on IRB models. This floor will be a proportion of the equivalent standardized calculation RWA value
    • All banks will calculate the RWA arising from operational risk in the same way, using the Basel Standardized Measurement Approach
    • IRB banks will be required to report RWAs (and associated credit ratios) calculated using the standardized approach, along with the RWAs arising from the IRB approach (dual reporting).

    The in-principle decisions are designed to bolster the capital that banks need to hold, to make it easier for investors to assess capital adequacy, and to minimize any unintended competitive advantages. The next phase of the capital review will be a quantitative impact study of the in-principle decisions made by RBNZ so far. The final phase will address the setting of minimum capital ratios. RBNZ aims to conclude the key elements of the capital review in 2018.

     

    Related Links

    Keywords: Asia Pacific, New Zealand, Banking, In-Principle Decision, Capital Adequacy Framework, Basel III, Risk Weighted Assets, RBNZ

    Featured Experts
    Related Articles
    News

    EIOPA Forms Consultative Expert Group on Digital Ethics in Insurance

    EIOPA established the Consultative Expert Group on Digital Ethics in Insurance to assist EIOPA in the development of digital responsibility principles in insurance.

    September 17, 2019 WebPage Regulatory News
    News

    FASB Proposes Taxonomy Changes Related to Topics 848 and 470

    FASB proposed taxonomy improvements for the proposed Accounting Standards Update on topic 848 on facilitation of effects of reference rate reform on financial reporting.

    September 16, 2019 WebPage Regulatory News
    News

    BoE Statement on Recalculating Transitional Measures Under Solvency II

    BoE notified that it will be willing to accept applications from firms to recalculate transitional measure on technical provisions (TMTP) as at September 30, 2019.

    September 16, 2019 WebPage Regulatory News
    News

    BIS Hosts Conference to Discuss Issues from Emergence of Stablecoins

    BIS hosted a conference in Basel to discuss policy and regulatory issues posed by the emergence of stablecoin initiatives backed by financial institutions and large technology companies.

    September 16, 2019 WebPage Regulatory News
    News

    BIS Paper on Embedded Supervision of Blockchain-Based Financial Market

    BIS published a working paper that investigates ways to regulate and supervise blockchain-based financial markets.

    September 16, 2019 WebPage Regulatory News
    News

    BoE Paper on Market-Implied Systemic Risk and Shadow Capital Adequacy

    BoE published a working paper that presents a forward-looking approach to measure systemic solvency risk.

    September 13, 2019 WebPage Regulatory News
    News

    HKMA Consults on Policy Module on Pillar 2 Supervisory Review Process

    HKMA is consulting on the revised Supervisory Policy Manual module CA-G-5 that sets out the HKMA approach to conducting the supervisory review process under Pillar 2.

    September 13, 2019 WebPage Regulatory News
    News

    PRA Publishes Waiver by Consent of Continuity of Access Rules

    PRA published a new waiver by consent to waive the Continuity of Access requirements contained in the Depositor Protection Part of the PRA Rulebook (DPP).

    September 13, 2019 WebPage Regulatory News
    News

    EBA Single Rulebook Q&A: Second Update for September 2019

    EBA updated the Single Rulebook question and answer (Q&A) tool with answers to three questions.

    September 13, 2019 WebPage Regulatory News
    News

    BoE Publishes Update on Meeting of Working Group on Risk-Free Rates

    BoE published the minutes of the July meeting of working group on sterling risk-free reference rates.

    September 13, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3827