Deposit Takers (Incorporation outside New Zealand) Standard 2027

4 Transitional, savings, and related provisions 3 Requirements regarding country of incorporation 5 Licensed deposit taker must incorporate under New Zealand legislation unless certain requirements are met 3 6 Meaning of wholesale client 4 7 Meaning of large corporate or institutional client 4 Assessment by deposit taker 8 Assessing whether person who will be client meets definition 5 9 Assessing whether person continues to meet definition 6 10 What happens if client no longer meets definition 6 11 Assessments must rely on information in financial statements if relevant 6
Schedule 1
Transitional, savings, and related provisions
1 Title 2
2 Commencement 2
Preliminary provisions
3 Interpretation 2
4 Transitional, savings, and related provisions 2 Requirements regarding country of incorporation 5 Licensed deposit taker must incorporate under New Zealand legislation unless certain requirements are met 3 6 Meaning of wholesale client 3 7 Meaning of large corporate or institutional client 3 Assessment by deposit taker 8 Assessing whether person who will be client meets definition 4 9 Assessing whether person continues to meet definition 5 10 What happens if client no longer meets definition 5 11 Assessments must rely on information in financial statements if relevant 5
Schedule 1
Transitional, savings, and related provisions
Standard
1 Title
This is the Deposit Takers (Incorporation outside New Zealand) Standard 2027. 2 Commencement This standard comes into force on 1 December 2028.

Preliminary provisions
3 Interpretation
In this standard, unless the context otherwise requires,— Act means the Deposit Takers Act 2023 client, in relation to a deposit taker, means a person to whom the deposit taker provides a financial service in New Zealand that is within the meaning of the term in
section 5(1) of the Financial Service Providers (Registration and Dispute Resolution)
Act 2008 large corporate or institutional client has the meaning set out in clause 7 New Zealand licensed deposit taker means a licensed deposit taker incorporated in New Zealand relevant time, in relation to a client of a deposit taker means the time immediately before the person becomes a client wholesale client has the meaning set out in clause 6. 4 Transitional, savings, and related provisions The transitional, savings and related provisions set out in the Schedule have effect according to their terms. Requirements regarding country of incorporation 5 Licensed deposit taker must incorporate under New Zealand legislation unless certain requirements are met (1) A licensed deposit taker (A) must be incorporated under New Zealand legislation unless— (a) A is an overseas licensed deposit taker; and (b) the assets of the New Zealand business of A are $15 billion or less; and (c) the New Zealand business of A is less than 50% of its total business; and (d) the New Zealand business of A is limited to,— (i) in the case of an overseas licensed deposit taker that is a holding entity of a New Zealand licensed deposit taker, large corporate or institutional clients:
(ii) in any other case, wholesale clients.
(2) In subclause (1)(b), assets must be calculated by reference to the financial statements for the New Zealand business. (3) In this clause, New Zealand business, in relation to an overseas licensed deposit taker that is a holding entity of a New Zealand licensed deposit taker, does not include the business of the New Zealand licensed deposit taker and its subsidiaries, if any.

6 Meaning of wholesale client
(1) In this standard, wholesale client, in relation to an overseas licensed deposit taker, means a client of a deposit taker if the client, or an associated person of the client, is assessed as required byunder any of clauses 8 to 10 as 1 or more of the following:
(a) a person who is in the business of providing a financial service within the meaning of section 6 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008:
(b) a person who is a wholesale investor within the meaning of clause 3(2) of
Schedule 1 of the FMCA:
(c) a person who, in relation to a relevant transaction with the deposit taker, is an eligible investor under clause 41 of Schedule 1 of the FMCA:
(d) a person who, in relation to a financial service received from the deposit taker, is an eligible investor under section 49A of the Financial Service Providers (Registration and Dispute Resolution) Act 2008. (2) In this clause, relevant transaction has the meaning set out in clause 49 of Schedule 1 of the FMCA. 7 Meaning of large corporate or institutional client (1) In this standard, large corporate or institutional client, in relation to an overseas licensed deposit taker, means a client of person that is assessed by a deposit taker if the client is assessed as required byunder any of clauses 8 to 10 as a person that either meets or is reasonably expected client to meetwhom 1 or more of the tests in subclause (2)— following applies:
(a) within 3 financial years after the assessment; or (b) at a time described in the tests in subclause (2)(f)(ii) or (h), as applicable. (2) The tests referred to in subclause (1) are as follows:
(a) the total assets of the client and associated persons of the client exceed $75 million as at the last day of each of the 2 most recently completed financial years:
(b) the total consolidated turnover of the client and associated persons of the client exceeds $50 million in each of the 2 most recently completed financial years:
(c) the total scheme property of any managed investment schemes for which the client and associated persons of the client are custodian or manager or investment manager exceeds $250 million:
(d) the total investor money and investor property for which the client and associated persons of the client are a custodian or DIMS licensee, under any discretionary investment management service, exceeds $250 million:
(e) the total funds under management the client or an associated person of the client is likely to experience an event causing rapid growth to its business (for example, a merger), which would reasonably be expected to cause the client and associated persons of the client are a fund manager exceed $250to have either or both of the following:

(i) total assets exceeding $75 million: as at the last day of each of the 2 complete financial years following the event:
(ii) total consolidated turnover of $50 million in each of the 2 complete financial years following the event:
(f)(e) the client or an associated person of the client— (i) is a special purpose vehicle in relation to a project; and (ii) would reasonably be expected to have total assets exceeding $75 million by the completion of the project:. (f) the client or an associated person of the client is a government agency:
(g) the client or an associated person of the client is a securitisation warehouse entity that would reasonably be expected to have total assets exceeding $75 million during the term of the warehousing arrangement. (3) When the client is a joint venture, the client meets the definition of large corporate or institutional client if at least 1 of the parties to the joint venture is reasonably expected to meet 1 of the tests set out in subclause (2) either at the date of assessment or within 3 financial years after the date of assessment. (4) The thresholds required for the tests set out in subclauses (2)(a) to (e) must be met within the 3-year period referred to in subclause (1)(a). (2)(5) In this clause,— custodian, investment manager, manager, and scheme property have the same meanings as in section 6(1) of the FMCA DIMS licensee has the same meaning as in section 432A(3) of the FMCA government agency has the same meaning as in clause 40 of schedule 1 of the FMCA investor money and investor property have the same meanings as in section 444 of the FMCA joint venture has the same meaning as in clause 5 of the Deposit Takers (Capital) Standard 2027 managed investment scheme has the same meaning as in section 9 of the FMCA manager has the same meaning as in section 6(1) of the FMCA. Assessment by deposit taker 8 Assessing whether person who will be client meets definition (1) This clause applies for the purposes of assessing whether a person is a client as defined in, under clause 6 or 7, as the case requires, a person who will be a client or an associated person of a client. (2) A deposit taker must make the assessment at the relevant time immediately before the person becomes a client, as if the person were a client or an associated person of a client at that time.

9 Assessing whether person continues to meet definition (1) A person continues to meet the definition in clause 6 or 7, as the case requires, if the deposit taker periodically assesses that the person meets the definition. (2) The assessment must be carried out as soon as reasonably practicable after every thirdsecond financial year after the last assessment. (as soon as reasonably practicable after the person's financial statements for that financial year are available). 10 What happens if client no longer meets definition (1) This clause applies if, as required byunder clause 9, a person is assessed as no longer meeting the definition in clause 6 or 7, as the case requires. However, this clause does not apply in relation to the warehousing arrangements referred to in clause 7(2)(h). (2) The person is to be treated as continuing to meet the definition until the earliest of the following occurs:
(a) the deposit taker assesses that the person meets the definition:
(b) the person ceases to be a client of the deposit taker:
(c) the close of the day that is 6 months after the person's financial statements for the next financial year are available. (3) Despite subclause (2), a deposit taker may continue to treat a person as a client— (a) in relation to a non-performing loan, until such time as the loan is written off, paid, disposed of, or varied and repaid:
(b) in relation to a transaction to which subclause (2)(b) or (c) applies, until the maturity date of the transaction when that is longer than the period specified. (4) For the purposes of this clause, a deposit taker may include in its assessment— (a) a new transaction that is necessary to carry on the client's business when the transaction has a maturity date that falls before the end of the period specified in subclause (2)(c):
(b) a variation of the terms and conditions of an existing arrangement, other than an extension of the original maturity date. (3)(5) An assessment under subclause (2)(a) must be treated as if it takes place after the thirdsecond financial year after the last assessment. (6) In this clause,— (4)(7) , next financial year means the financial year after the assessment. non-performing loan has the same meaning as in clause 3 of the Deposit Takers (Liquidity) Standard 2027 11 Assessments must rely on information in financial statements if relevant A deposit taker that assesses a person as required byunder any of clauses 8 to 10 must rely on information in the person's financial statements but only to the extent to whichif the information is relevant to the assessment.

cl 4
Schedule 1
Transitional, savings, and related provisions
Part 1
Provisions relating to this standard as made
1 Assessing whether existing client meets definition (1) This clause applies for the purposes of assessing, as required by clauses 8 to 10under clause 6 or 7 as the case requires, a person who is, immediately before commencement, an existing client or associated person of an existing client as defined under clause 6 or 7, as the case requires. (2) A deposit taker must make the assessment at the relevant time within the transitional period described in the definition of relevant time below. (3) The assessment must rely on information in the person's financial statements if the information is relevant to the assessment. (4) This clause overrides clause 8 and the definition of relevant time in clause 3, in respect of existing clients of a deposit taker. (5) In this clause and clause 2— existing client means a person who is a client of the deposit taker immediately before this standard comes into force. relevant time means the beginning of a day falling in the period that—the day on which this standard comes into force. (a) starts on the day that is 18 months before the date on which the standard comes into force; and (b) ends on the day that is 18 months after the date on which the standard comes into force. 2 Restriction on continuation of existing transactions with existing clients (1) This clause applies in relation to an existing transaction with an existing client when the deposit taker's assessment of the client results in the client failing to meet the requirements of clause 6 or 7, as the case requires. (2) The deposit taker may continue the transaction only if it has approval from the Bank to do so. (3) In deciding whether to give its approval and any conditions of that approval, the Bank must be satisfied that— (a) the transaction is not material:
(b) the transaction has a maturity date that is past the date on which the standard comes into force:

(c) the continuation of the transaction by the deposit taker would not compromise the safety and soundness of the deposit taker. (4) For the purposes of subclause (3)(a), when the Bank is considering whether a transaction is material, the Bank may have regard to the transaction itself, or to the transaction together with other transactions entered into by the deposit taker. (5) In relation to a transaction for which a deposit taker has approval to continue, variation is permitted of a term or condition other than an extension of the original maturity date. (6) An approval given under subclause (3) must contain a date on which both— (a) the deposit taker must end the existing transaction; and (b) the Bank's approval expires. Made at Wellington on [day month year]. Reserve Bank of New Zealand Explanatory note This note is not part of the standard but is intended to indicate its general effect. This standard is issued under the Deposit Takers Act 2023 (the Act). The standard prescribes matters relating to the country of incorporation of a licensed deposit taker, as contemplated by
section 78(c)(ii) of the Act. It comes into force on 1 December 2028.
All licensed deposit takers under the Act are body corporates. In this regard, see section 16 of the Act. Part 1 restricts incorporation of a deposit taker outside New Zealand. The effect of this standard is that a deposit taker that is an overseas person can only carry on the business of a deposit taker if it meets specified requirements. Otherwise, it would have to cease carrying on business as a deposit taker or become incorporated under New Zealand legislation. The key requirements are set out in clause 5. They relate to the New Zealand business of the overseas licensed deposit taker, which is commonly referred to as a branch of the deposit taker. Generally, the New Zealand business—

• must have assets of $15 billion or less; and
• must be less than 50% of the deposit taker’s total business; and
• must be limited to wholesale clients.

Whether a deposit taker’s client is a wholesale client depends on the deposit taker assessing that the client or an associated person of the client is 1 or more of the types of wholesale client specified in clause 6. Associated person is defined in section 7 of the Act. Different requirements apply in the case of an overseas licensed deposit taker that is the holding entity of a New Zealand licensed deposit taker (sometimes referred to as a dual-operating branch). In this case, the New Zealand business—

• must have assets of $15 billion or less; and
• must be less than 50% of the deposit taker’s total business; and
• must be limited to large corporate or institutional clients.
  Whether a deposit taker’s client is a large corporate or institutional client depends on the deposit taker assessing that the client meets the criteria in clause 7. For these clients, the New Zealand business does not include the business of the New Zealand licensed deposit taker and its subsidiaries. The standard sets out when a deposit taker must assess a client under the standard. The assessment must be made—
• for a new client, at the time immediately before they become a client; and
• for an existing client, at the relevant time, that is, on a date in the 3-year period that
  straddles the commencement datestandard commences.
  The standard also requires deposit takers to periodically assess whether theirits clients continue to meet the requirements in the standard to be wholesale clients or large corporate or institutional clients (as the case requires). These assessments must occur in every thirdafter financial statements are available for every second financial year after the last assessment. If a deposit taker assesses that a client no longer meets the relevant definition, the standard provides that the client is still treated as meeting the definition for up to 6 months after the client’s financial statements for the next financial year become available (an extra period). The extra period ends earlier if the deposit taker either assesses as required by any of clauses 8 to 10under clause 6 or 7, as the case requires, that the person meets the definition, or ends the client relationship. The effect of this provision is that a deposit taker has a period to reassess the client, taking into account the next financial statements, in case the client’s situation changes. Exceptions apply in relation to the general rule for the treatment of clients that no longer meet the relevant definition. These relate to certain transactions other than warehousing arrangements in relation to non-performing loans and certain necessary transactions or variations to transactions. This is secondary legislation issued under the authority of the Legislation Act 2019. Title Deposit Takers (Incorporation outside New Zealand) Standard 2027 Principal or amendment Principal Consolidated version No Empowering Act and provisions Deposit Takers Act 2023
  section 72
  Replacement empowering Act and provisions
  Not applicable
  Maker name Reserve Bank of New Zealand

Administering agency Reserve Bank of New Zealand Date made [day month year] Publication date Click or tap to enter a date Notification date Click or tap to enter a date [Insert date notified. If there is no requirement to notify, state "Not applicable"] Commencement date 1 December 2028 End date (when applicable) Consolidation as at date Not applicable Related instruments Not applicable