Reserve Bank Finalises Bank Capital Rules, Improves Format Of Banking Rules

The Reserve Bank of New Zealand – Te Pūtea Matua has published the finalised bank capital adequacy requirements, outlined in the new, more user-friendly Banking Prudential Requirements (BPR) documents.

The new rules implement the decisions made during the Capital Review.

Deputy Governor and General Manager of Financial Stability Geoff Bascand says the new framework increases the amount of capital banks must have, which will make the banking system safer for all New Zealanders.

Increases in capital will be phased in over a seven-year period, starting from July 2022. Other changes will be gradually phased in from October 2021 onwards.

“In response to feedback from banks, we’ve also improved the way the rules are structured, presenting them as a series of Banking Prudential Requirements, rather than changing a ‘Handbook’. This will ensure the rules are more transparent and easier to follow,” Mr Bascand says.

“The regulatory framework for capital is now more up-to-date, logical and transparent. Banks will find it easier to understand our expectations and comply with them.

“The documents are extensive and incorporate valuable feedback from banks’ engagement with earlier drafts of the documents which we are grateful for.”

We are also releasing a formal Response to Submissions, which explains how we have responded to industry’s feedback.

More information:

• Final Banking Prudential Requirements documents
• Exposure Draft consultation submissions (PDF 24MB)
• Changes to the Banking Supervision Handbook: Exposure Draft for Capital Review Changes - Response to Submissions (PDF 1.1MB)
• Guidance Note: Application of BS16 up to 30 September 2021 (PDF 774KB)
• A summary of the new Capital Buffer Response Framework (PDF 887KB)

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