Regulatory Alerts2022-05-17
Reserve Bank of New Zealand Memorandum on 2017 PwC Study of Bank Capital Ratios
The Reserve Bank of New Zealand's Financial Policy division critiques a 2017 PwC study claiming NZ bank capital ratios are 600 basis points higher than reported on an international basis. The regulator argues the study is flawed because it fails to distinguish between regulatory conservatism and constraints reflecting systemic risks, while also ignoring Pillar 2 adjustments and accounting discretions. Consequently, the memorandum concludes that the PwC findings are not a reasonable point estimate and should be considered alongside other data, such as S&P's Risk Adjusted Capital analysis, during the ongoing Capital Review.
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