Regulatory Alerts2022-05-17
Capital Adequacy Framework Standardised Approach
The Reserve Bank of New Zealand issued document BS2A to establish the methodology for locally incorporated registered banks adopting the standardised approach to calculate capital adequacy ratios. 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 regulatory adjustments for each category. It further mandates detailed risk-weighting procedures for credit, operational, and market risks, alongside specific provisions for insurance, securitisation, and capital instrument approval processes.
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