24 October 2003

RBNZ consents to ANZ National Bank purchase

The Reserve Bank today announced that it has consented to the ANZ Banking Group (New Zealand) Limited purchase of the National Bank of New Zealand Limited.

The Reserve Bank Amendment Act 2003 requires the Reserve Bank's consent to a purchase of more than 10 per cent of a bank registered in New Zealand.

Reserve Bank Governor Alan Bollard commented "This consent is subject to specific conditions which are laid out in Attachment 1 to this press statement.

"These requirements are aimed at reinforcing the Reserve Bank's bank local incorporation policy. We are aiming to ensure that the boards of locally-incorporated registered banks have unambiguous legal authority and the practical ability to control all the functions, systems and management capacity necessary to operate on a standalone basis.

"We are also imposing an additional condition of registration on ANZ Banking Group (New Zealand) Limited, as set out in Attachment 2. This requires each registered bank in the ANZ group, as well as the consolidated banking group, to have a level of capital adequacy that is prudent.

"These steps are necessary given the Reserve Bank's statutory obligation to promote the maintenance of a sound and efficient financial system in New Zealand and to avoid the significant damage to the financial system that could result from the failure of a registered bank.

"Nothing in this formal consent over-rides the fact that, as conveyed in our 29 August 2003 letter to the banking industry, the Reserve Bank is currently exploring the merits of a range of enhanced risk management requirements for banks, as part of our broader financial stability programme," Dr Bollard concluded.

Note that details as to what the Reserve Bank is required to consider in regard to a proposed bank purchase are outlined in Document BS9 at http://www.rbnz.govt.nz/finstab/banking/regulation/0094291.html.

For further information contact
Paul Jackman
Head of Corporate Affairs
Ph 04 471 3671, 021 497 418, Jackmanp@rbnz.govt.nz

Attachment 1

Conditions of Consent

1. Migration of business and out sourcing of functionality

(a) None of the transfers or changes described in paragraph (c) of this condition may be made except with the consent of the Reserve Bank.

(b) In considering any application for such consent, the Reserve Bank will take into account the extent to which the directors or a statutory manager of the National Bank of New Zealand Limited would have unambiguous legal authority and practical ability to control all the functions, systems and management capacity necessary to operate that bank on a standalone basis if the proposed transfer or change were implemented.

(i) any transfer to another entity in the ANZ banking group of all or a material part of any business (which term shall include the customers of the business) which is being carried on by any entity in the National Bank of New Zealand Limited banking group at the date of this consent;

(ii) any merger or amalgamation between the National Bank of New Zealand Limited or any subsidiary of that company and any other entity in the ANZ banking group;

(iii) any transfer or change by which all or a material part of the management, operational capacity and systems of any entity in the National Bank of New Zealand Limited banking group is transferred to, or is to be performed by, another entity; and

(iv) any other change in the arrangements by which any function relating to any business carried on by any entity in the National Bank of New Zealand Limited banking group is performed, which has or may have the effect that all or a material part of any such function will be performed by another entity.

2. Staff appointments

(a) No appointment of any director, chief executive officer, or executive who reports or is accountable directly to the chief executive officer, shall be made in respect of either ANZ Banking Group (New Zealand) Limited or the National Bank of New Zealand Limited unless:

(i) the Reserve Bank has been supplied with a copy of the curriculum vitae of the proposed appointee, and

(ii) the Reserve Bank has advised that it has no objection to that appointment.

3. Governance

(a) The management of The National Bank of New Zealand Limited by its chief executive officer shall be carried out under the direction and supervision of the board of directors of The National Bank of New Zealand Limited.

(b) The employment contract of the chief executive officer of The National Bank of New Zealand Limited shall be between the chief executive officer and the board of directors of The National Bank of New Zealand Limited.

(c) That any amendments to The National Bank of New Zealand's Limited's constitution have the prior approval of the Reserve Bank of New Zealand.

Attachment 2

Proposed condition of registration for ANZ Banking Group (New Zealand) Limited

The conditions of registration of ANZ Banking Group (New Zealand) Limited are varied by adding the following conditions as conditions 1A and 1B:

1A. ANZ Banking Group (New Zealand) Limited, being the registered bank, must at all times:

· Maintain a ratio of tier one capital to risk weighted exposures of at least 4 per cent; and
· Maintain a ratio of total capital to risk weighted exposures of at least 8 per cent.

For the purposes of this condition of registration, tier one capital, total capital and risk weighted exposures shall be calculated in accordance with the Reserve Bank of New Zealand document entitled: "Capital Adequacy Framework" (BS2), except that:

(i) all tier one and tier two capital instruments issued by The National Bank of New Zealand Limited must be deducted from ANZ Banking Group (New Zealand) Limited's tier one capital unless they are held by a person who is not a member of the ANZ Banking Group (New Zealand) Limited's banking group; and

(ii) where a deduction from tier one capital is required in terms of paragraph (i), no further deduction from total capital shall be required in respect of ANZ Banking Group (New Zealand) Limited's direct or indirect holding of that instrument.

1B. In its disclosure statements under the Registered Bank Disclosure Statement (Off-Quarter - New Zealand Incorporated Registered Banks) Order 1998, ANZ Banking Group must include all of the information relating to the capital position of both the registered bank and the banking group which would be required if the second schedule of that Order was replaced by the second schedule of the Registered Bank Disclosure Statement (Full and Half-Year - New Zealand Incorporated Registered Banks) Order 1998 in respect of the relevant quarter.