Regulatory Alerts2023-07-09
Mutual Capital Instruments Response to Submissions on Exposure Drafts
The Reserve Bank of New Zealand has refined the design of Mutual Capital Instruments (MCI) following consultation on Exposure Drafts of BPR110 and BPR120. The regulator permitted MCIs to be denominated in foreign currencies and governed by specific foreign laws, while allowing banking group members to purchase previously issued instruments provided they are deducted from capital. Additionally, the Reserve Bank created a new subpart D1A in BPR110 to separate MCI requirements from ordinary shares and retained discretion for banks to cap surplus asset distributions upon wind-up.
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