Regulatory Alerts2022-05-17
Added · Updated
Reserve Bank of New Zealand Capital Adequacy Framework Internal Models Based Approach
The Reserve Bank of New Zealand issued document BS2B to establish the methodology for locally incorporated registered banks accredited to use internal models for calculating capital ratio requirements. 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, loss absorbency requirements, and regulatory adjustments for each category. It further mandates specific consolidation rules for banking groups and subsidiaries while outlining minimum requirements for the Internal Ratings Based approach to credit risk and advanced measurement approaches for operational risk.
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