Key prudential requirements for banks in New Zealand

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Standards and requirements for banks

Published:

The table below provides information on some key prudential requirements to which banks operating in New Zealand may be subject. More comprehensive information can be found in the banking prudential requirements.

Capital

New Zealand-incorporated registered banks are subject to conditions of registration requiring them to maintain a minimum level of, and quality of, capital relative to their risk-weighted assets.

Liquidity

New Zealand-incorporated registered banks are subject to conditions of registration relating to liquidity management, including both quantitative and qualitative requirements.

Governance

New Zealand-incorporated registered banks are subject to conditions of registration relating to corporate governance.

Disclosure

All New Zealand-registered banks are required to publish a six-monthly disclosure statement. These disclosure requirements are administered by the Reserve Bank of New Zealand.

Credit ratings

All New Zealand-registered banks must obtain and maintain a credit rating applicable to their long-term senior unsecured obligations payable in New Zealand, in New Zealand dollars.

Outsourcing

Large New Zealand-registered banks are subject to a condition of registration that requires them to have the legal and practical ability to control and execute core outsourced functions.

Connected exposures

New Zealand-incorporated registered banks are subject to limits on the level of credit exposures that they have to connected persons.

Open bank resolution

New Zealand- incorporated registered banks with retail deposits over NZ$1 billion are subject to conditions of registration relating to pre-positioning requirements under the open bank resolution (OBR) policy. OBR pre-positioning is a mechanism for providing bank customers continued access to liquidity and banking service in a bank failure event. The conditions of registration shall also apply to other banks that decide to opt-in or comply with the OBR policy.

Macro-prudential

New Zealand-registered banks may be subject to macro-prudential requirements from time to time.