Regulatory Alerts2022-12-07
Reserve Bank of New Zealand Regulatory Impact Assessment for Mutual Capital Instruments
The Reserve Bank of New Zealand proposes a new Mutual Capital Instrument to enable mutual banks to raise Common Equity Tier 1 capital without compromising their mutual ownership structure. This initiative addresses the conflict between current prudential capital requirements and the equal voting and distribution rights inherent to mutual banks, which currently restrict their ability to compete with non-mutual institutions. The assessment evaluates policy options and identifies the Mutual Equity Tier 1 capital instrument as the preferred solution to enhance financial system stability and diversity.
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