Regulatory Alerts2022-05-17
Capital Adequacy Framework Standardised Approach
The Reserve Bank of New Zealand's Prudential Supervision Department issued document BS2A to establish the methodology for locally incorporated registered banks adopting the standardised approach for calculating capital requirements. The framework defines tier one and tier two capital components, including specific eligibility criteria for instruments and mandatory deductions from total capital. It further prescribes risk weightings for credit and market exposures, rules for credit risk mitigation, and requirements for operational risk and insurance business consolidation.
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