Regulatory Alerts2022-05-17
Capital Adequacy Framework (Standardised Approach)
The Reserve Bank of New Zealand issued document BS2A to establish the methodology for locally incorporated registered banks using the standardised approach to calculate capital adequacy ratios. The framework defines total regulatory capital as the sum of Common Equity Tier 1, Additional Tier 1, and Tier 2 capital, specifying strict eligibility criteria and regulatory adjustments for each category. It further mandates detailed calculations for risk-weighted assets covering credit, market, and operational risks, while outlining consolidation rules and loss absorbency requirements for capital instruments.
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