RBNZ Extends Bank Capital Consultation, Releases Background Research

In response to stakeholder feedback on doubling bank capital requirements, the RBNZ has extended the consultation deadline and released research originally intended for internal use.

The RBNZ (Reserve Bank of New Zealand) has pushed out the deadline for feedback on its proposals to increase bank capital by five weeks to 3 May 2019, in response to feedback from stakeholders.

“While we’ve published our proposed views in the consultation document, these are not final, and we want to ensure all interested parties have time to adequately consider the proposals and provide feedback,” said RBNZ deputy governor Geoff Bascand.

In December, the RBNZ proposed to nearly double banks’ capital requirements to reduce the likelihood of bank failures and improve the banking sector’s resilience to shocks. The heightened capital requirements seek to ensure that bank shareholders have a more meaningful stake so they absorb a greater share of losses in the event of a failure.

> ALSO READ: RBNZ Bank Capital Proposal Excessive, Expensive, Unnecessary – UBS (21 January 2019)

The RBNZ has also released background papers related to the ongoing consultation and its wider review of bank capital rules, which has been underway since 2016. The papers were prepared for RBNZ internal discussions in its development of the proposals, and include the extensive research, modelling and analysis that went into the review.

Additional technical papers on some specific topics, such as the cost of capital, will also be released as the review continues, the RBNZ said.

The RBNZ expects to publish its final decisions in Q3 2019, and provide a five-year transition period for banks to meet any new requirements it introduces.


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