Regulatory Alerts2022-05-17
Response to submissions on review of bank capital adequacy requirements for housing loans stage one
The Reserve Bank of New Zealand issued this response to submissions regarding its consultation on bank capital adequacy for housing loans, concluding that the standard 15 percent Basel correlation factor is insufficient for New Zealand conditions. Consequently, the regulator mandates higher correlation factors for internal models banks, specifically setting 20 percent for loans with loan-to-value ratios between 80 and 89 percent and 21 percent for those at 90 percent or higher. These revised capital requirements are scheduled to take effect on 30 September 2013 through updates to the Banking Supervision Handbook and banks' registration conditions.
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