Trans-Tasman Council on Banking Supervision

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Trans-Tasman Council on Banking Supervision

This page provides an overview of the development of the Trans-Tasman Council on Banking Supervision (TTBC).

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About TTBC

The Trans-Tasman Council on Banking Supervision (TTBC) was formed in February 2005 as a step towards developing a single trans-Tasman economic market in banking services.

The original members were the Australian and New Zealand Treasuries, the Reserve Banks of Australia and New Zealand and the Australian Prudential Regulation Authority (APRA). Subsequently, membership was extended to include the Australian Securities and Investments Commission (ASIC) and the New Zealand Financial Markets Authority (FMA).

Below is a chronology of the council's development and documents released at the time.

Chronology

2004

In January 2004, New Zealand's Minister of Finance and the Australian Treasurer announced a proposal for closer integration of the prudential regulation of the New Zealand and Australian banking systems.

A working party was formed to develop policy options for closer integration of trans-Tasman banking regulation. It comprised the Australian and New Zealand Treasuries, the Reserve Banks of Australia and New Zealand and APRA.

In July 2004, the working party delivered its report: 'Development of a framework for closer integration of trans-Tasman banking regulation'.

Development of a framework for closer integration of trans-Tasman banking regulation

At the same time, the Governor provided a memorandum to the Minister of Finance on the working party’s report:

Memorandum on trans-Tasman banking supervision, regulation and crisis management

The Treasury and Reserve Bank of New Zealand provided joint advice on the report:

Treasury report: Treasury and Reserve Bank comment on closer integration of trans-Tasman banking regulation

In August 2004, the Minister of Finance submitted a paper to Cabinet entitled 'Proposals for closer integration of trans-Tasman banking regulation and supervision'.

Proposals for closer integration of trans-Tasman banking regulation and supervision

2005

In August 2005, the council made recommendations to the Australian Treasurer and the New Zealand Minister of Finance on legislative changes to ensure APRA and the Reserve Bank of New Zealand supported each other in the performance of their current regulatory responsibilities.

These recommendations resulted in the Reserve Bank of New Zealand Amendment Act 2006 and an equivalent amendment act in Australia, the Financial Sector Legislation Amendment (Trans-Tasman Banking Supervision) Act 2006.

The effect of the legislative changes

The New Zealand and Australian legislation together represented a path-breaking advance in home-host supervisory cooperation.

The amendments require the Reserve Bank and APRA, when exercising their prudential regulation powers, to support each other in meeting their statutory responsibilities for prudential regulation and financial system stability and, where reasonably practicable, to avoid actions that are likely to have a detrimental effect on the financial system stability of the other country.

Where the regulator has reasonable cause to believe an action is likely to have a detrimental effect on financial system stability in the other country, it is required to consult with and consider the advice of the other regulator, if reasonably practicable to do so in the circumstances.

The legislation also imposes an obligation on a statutory manager or an administrator, where reasonably practicable to do so, to obtain the regulator's consent before taking an action that the statutory manager or administrator has reasonable cause to believe is likely to have a detrimental effect on financial system stability in the other country.

More information

The changes to the New Zealand legislation are described in more detail in a December 2006 Bulletin article: The Reserve Bank of New Zealand Amendment Act 2006.

See our bulletin article about the Reserve Bank of New Zealand Amendment Act 2006

The Banking (Prudential Supervision) Act 1989 and the Reserve Bank of New Zealand (Australian Financial Authorities) Regulations 2006 (SR 2006/373) can be viewed electronically on the New Zealand legislation website:

Banking (Prudential Supervision) Act 1989 No 157 (as at 01 July 2022), Public Act Contents – New Zealand Legislation

Reserve Bank of New Zealand (Australian Financial Authorities) Regulations 2006

In Australia, the Financial Sector Legislation Amendment (Trans-Tasman Banking Supervision) Act 2006 came into force on 6 December 2006. That legislation amended the following Australian legislation: the Australian Prudential Regulation Authority Act 1998, the Banking Act 1959 and the Financial Sector (Transfers of Business) Act 1999.

View the Australian legislation online