Banking system oversight
The Reserve Bank registers and supervises banks in New Zealand for the purposes of promoting the maintenance of a sound and efficient financial system, and avoiding significant damage to the financial system that could result from the failure of a registered bank.
While the Reserve Bank monitors registered banks’ compliance with banking supervision policies, neither it nor the Government guarantees that a registered bank will not get into difficulty or fail.
Part 4 of the Reserve Bank of New Zealand Act 1989 (see Our legislation) places restrictions on the use of the words “bank”, “banker”, “banking” and their derivatives. Those restrictions do not apply to banks registered under Part 5 of the Act which establishes the Reserve Bank’s bank registration and supervision functions and sets out its related powers and the purposes for which those powers must be exercised.
The Banking Supervision Handbook
The Banking Supervision Handbook contains the policy documents and Orders in Council setting out the details of our banking supervision framework pursuant to Part 5 of the Act.
Recent changes to banking supervision policy
On 30 June 2009, the Reserve Bank released its finalised liquidity policy for banks Liquidity Policy (BS13) (PDF 128KB) and Liquid Assets Annex (BS13A) (PDF 114KB). In a letter of the same date (PDF 30KB) the Reserve Bank set out its proposed process for implementing the policy for locally-incorporated banks, including transition arrangements. The Reserve Bank will be writing along similar lines to branches of overseas-incorporated banks shortly. The Reserve Bank will also be finalising its proposed liquidity reporting requirements for all registered banks in the near future.
A feedback statement (PDF 78KB) summarises the comments received on the consultation paper issued in October 2008, and how those comments have been reflected in the final policy. For more information on the new policy, please see the prudential liquidity policy Q&A.
The Reserve Bank of New Zealand (Registration and Supervision of Banks) Regulations 2008 came into effect on 30 October 2008. These regulations set out additional matters that the Reserve Bank will consider, under section 78(1) of the Reserve Bank of New Zealand Act 1989, in determining whether a registered bank has carried on its business in a prudent manner or an applicant for bank registration will be able to carry on its proposed business in a prudent manner. The additional matters are the policies, systems, and procedures, or proposed policies, systems and procedures, to detect and deter money laundering and terrorist financing.
For more detailed information please see the Cabinet Paper and the Regulatory Impact Statement.
In February 2009 the Reserve Bank made some changes to the Banking Supervision Handbook. Most of the changes were to BS5 (Guidelines on Anti-Money Laundering and Countering Financing of Terrorism). The changes to BS5 stemmed from the new regulations relating to the detection and deterrence of money laundering and terrorist financing noted above. These regulations make the Reserve Bank’s power to consider anti-money laundering and countering financing of terrorism more explicit. The changes made to BS5 ensure its content is up-to-date and elevate the BS5 document to ‘guidelines’ issued under section 78(3) of the Reserve Bank of New Zealand Act 1989.
Changes have also been made to BS1 (Statement of Principles – bank registration and supervision), BS3 (Application for status as a registered bank: Material to be provided to the Reserve Bank), and BS10 (Review of the Suitability of Bank Directors and Senior Managers). These changes ensure the consistency of BS1 and BS3 with updated BS5, take account of the availability of the Retail Deposit Guarantee Scheme and the Wholesale Funding Guarantee Facility, and include various minor ‘housing keeping’ amendments.
Basel II
Information on the implementation of the Basel II capital adequacy framework in New Zealand is available here.
Bank registration information
The purpose of this bank registration information document (PDF 139KB) is to provide information and guidance to potential applicants for bank registration. It covers the policies and processes the Reserve Bank applies to bank registration, and the relevant laws and regulations.
Outsourcing Requirements
Find out about the Reserve Bank’s outsourcing requirements for banks.
Other banking supervision topics
- Review of Trans-Tasman regulation
- Review of financial products and providers including non-bank deposit-takers
- Relationships with other domestic and international banking and financial system regulators
- Use of the words “bank”, “banker”, “banking” and their derivatives
- Banking supervision articles, speeches, and other general information
- Banking supervision seminars and workshops
Related areas
For information on banks currently registered in New Zealand, including their credit ratings and links to their websites, see the New Zealand banks section of our website.
You will find information extracted from the Key Information Summaries disclosed by registered banks in our Banking system statistics section
The Financial Stability Report contains general information on current issues and recent developments the New Zealand banking system. Before 2004 these matters were reported on in each June issue of the Reserve Bank Bulletin.
Information about what the Bank would do in a crisis situation, can be found in our Crisis Management area.
If you have not found the information you seek, please try our Banking system frequently asked questions (FAQs)
