Regulatory Alerts2022-05-17
Reserve Bank of New Zealand Response to Article on Capital Review
The Reserve Bank of New Zealand clarifies its capital review proposals in response to a January 2019 article, correcting misconceptions regarding the magnitude of required Tier 1 capital increases and the nature of regulatory instruments. The regulator emphasizes that stress testing results have limited predictive value, group capital requirements are irrelevant for New Zealand creditors, and Australian depositor protection relies on specific government schemes rather than superior banking regulations. Additionally, the Bank addresses concerns about market concentration and lending spreads, asserting that its proposals aim to level capital requirements across banks while maintaining constant dialogue with Australian regulators.
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