Regulatory Alerts2022-05-17
Reserve Bank of New Zealand Feedback on Pillar 2 Basel II Implementation
The Reserve Bank of New Zealand revised its Pillar 2 implementation strategy to exclude internally determined capital for other material risks from binding regulatory requirements, shifting to a disclosure-only approach. The regulator imposed a standard 15% capital add-on for credit risk on banks using internal models for residential mortgages and finalized guidelines for Internal Capital Adequacy Assessment Processes. This adjustment addresses industry concerns regarding volatility and harmonization while maintaining supervisory oversight through enhanced transparency and ongoing dialogue.
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