Regulatory Alerts2022-05-17
Added · Updated
Capital Adequacy Framework (Internal Models Based Approach) BS2B
The Reserve Bank of New Zealand issued document BS2B in October 2014 to establish the methodology for locally incorporated registered banks accredited to use internal models for calculating capital ratio requirements. The framework defines regulatory capital components, including Common Equity Tier 1, Additional Tier 1, and Tier 2 capital, while specifying strict criteria for instrument classification and mandatory deductions. It further mandates the use of the Internal Ratings-Based approach for credit risk and outlines supervisory requirements for model changes, accreditation, and the maintenance of a model compendium.
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