Regulatory Alerts2022-05-17
Basel III - draft BSB2 Capital adequacy framework for consultation
The Reserve Bank of New Zealand issued document BS2B to establish the methodology for locally incorporated registered banks accredited to use internal models for calculating capital ratio requirements. The framework defines total regulatory capital as the sum of Common Equity Tier 1, Additional Tier 1, and Tier 2 capital, specifying strict eligibility criteria and mandatory deductions for each category. It further details consolidation rules for banking groups and subsidiaries, ensuring that capital calculations reflect the substance of arrangements and maintain high-quality loss-absorbing capacity.
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