May 28, 2019

RBNZ announced the next steps in its Capital Review, which proposes changes to regulatory capital requirements for locally incorporated banks. The RBNZ consultation on the capital adequacy framework for banks had ended on May 13, 2019. An announcement on the finalization of rules is planned by the end of November, with implementation of any new rules starting from April next year.

The proposed changes include requiring bank shareholders to increase their stake so that they absorb a greater share of losses should their bank fail and ensuring that banks more accurately calculate the capital that they have. The submissions on the consultation will now be collated and published along with a summary in June. As part of the next stage of the Capital Review, RBNZ has commissioned three external experts to independently review the analysis and advice underpinning the proposals.  The reports by these experts will be part of the suite of information considered in the final decision-making process of the review. An announcement is planned by the end of November, with implementation of any new rules starting from April next year. There will be a transition period of a number of years before banks are required to fully comply with any new rules. The review began more than two years ago, when the Reserve Bank published an issues paper and opened the first of four public consultations.

 

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Keywords: Asia Pacific, New Zealand, Banking, Capital Adequacy Framework, Regulatory Capital, Basel III, RBNZ

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