Regulatory Alerts2022-05-17
Capital review - Total loss absorbing capacity ('TLAC')
The Reserve Bank of New Zealand recommends against implementing minimum Total Loss Absorbing Capacity requirements for domestic banks, concluding that such measures would not yield meaningful net benefits at this time. The memorandum highlights significant complexities regarding cross-border resolution strategies and the reliability of debt instruments for bail-in purposes as primary reasons for this decision. Instead, the regulator will continue to monitor global TLAC developments and investigate requirements for banks to regularly report the value and class of liabilities owed to related parties.
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