Regulatory Alerts2022-05-17
Review of bank capital adequacy requirements for housing loans (phase one)
The Reserve Bank of New Zealand proposes increasing the correlation factor for high loan-to-value ratio housing loans to better reflect systemic risk in its capital adequacy framework. This adjustment specifically targets internal models banks, requiring them to hold more capital for high LVR loans due to evidence that such loans exhibit higher correlation during economic downturns. The regulator invites stakeholder submissions on these proposed technical changes to the Basel equation parameters by 16 April 2013.
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