Regulatory Alerts2025-12-16
2025 Review of Key Capital Settings Decision Document
The Reserve Bank of New Zealand has recalibrated prudential capital requirements to reduce overall system capital and lower funding costs for deposit takers. The decision introduces a 6% Loss Absorbing Capacity requirement for Group 1 banks, removes Additional Tier 1 instruments, and significantly reduces Tier 1 capital ratios across all groups through more granular risk weights. These changes aim to balance financial stability with economic efficiency, supported by an estimated reduction in weighted average funding costs of 0.12% compared to previous 2028 settings.
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