Open Bank Resolution
Open Bank Resolution is a long-standing Reserve Bank policy aimed at allowing a distressed bank to be kept open for business, while placing the cost of a bank failure primarily on the bank’s shareholders and creditors, rather than the taxpayer.
The Reserve Bank is continuing to work with relevant banks to implement the Open Bank Resolution (OBR) policy. In March 2013 the Reserve Bank issued a consultation package on the proposed changes to the Banking Supervision Handbook. This package includes the cover letter to banks (PDF 55KB), draft changes to the Statement of Principles (BS1) (PDF 29KB) and the proposed Open Bank Resolution (OBR) Pre-positioning Requirements Policy (BS17) Handbook document (PDF 286KB). The Handbook document sets out the expected outcomes and the required OBR functionality that banks must have in place ahead of a failure event. The deadline to make submissions is 30 April 2013 (this is an extension to the original deadline of 15 April 2013).
Submissions and enquiries about the consultation should be addressed to:
Manager, Financial System Policy
Prudential Supervision Department
Reserve Bank of New Zealand
PO Box 2498
In November 2012, the Reserve Bank published a response to the submissions (PDF 137KB) a regulatory impact assessment (PDF 251KB) and a summary assessment of OBR against the recommendations of the Financial Stability Board.
In March 2011, the Reserve Bank issued a consultation paper (PDF 146KB) on the pre-positioning requirements that locally incorporated banks with retail deposits over $1 billion will be expected to comply with to implement the Open Bank Resolution (OBR) policy. The OBR policy would allow a distressed bank to be kept open for business, providing continuity of core banking services to retail customers and businesses, while placing the cost of a bank failure primarily on the bank’s shareholders and creditors rather than the taxpayer. The consultation closed on 30 September 2011.
- See this Q&A for responses to frequently asked questions about OBR.
- This background feature explains OBR in simple terms.
- This speech entitled Handling Bank Failures, by Reserve Bank Head of Prudential Supervision Toby Fiennes, and accompanying news release, include information on Open Bank Resolution and deposit insurance.
- Two Bulletin articles have been released explaining OBR in more detail, these include A primer on Open Bank Resolution and Open Bank Resolution – the New Zealand response to a global challenge .
- For news releases on OBR, please see the Reserve Bank news releases.
- Recent Financial Stability Reports also include further information on OBR.
April 2013: The Reserve Bank has released information relating to deposit insurance, and alternative bank failure resolution options to Open Bank Resolution.