Regulatory Alerts2022-05-17
Capital review - A common equity instrument for mutual society banks
The Reserve Bank of New Zealand issued this memorandum to outline preliminary analysis regarding the inclusion of a common equity instrument for mutual society banks within the capital framework. The document identifies that current Basel III standards conflict with mutual society membership structures, prompting consideration of alternative instruments such as APRA's mutual equity interest or UK mutual deferred shares. The regulator recommends an in-principle decision to proceed with developing a proposal for consultation, acknowledging that detailed design work must be conducted in conjunction with affected mutual society banks.
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