First disclosures under Basel II for New Zealand banks
In the coming weeks, New Zealand banks will release quarterly disclosure statements which will reflect the Reserve Bank's new Basel II capital adequacy requirements for the first time.
The Reserve Bank's disclosure requirements under Basel II include more comprehensive disclosure of risk information compared to the earlier Basel I requirements. Also banks are required to disclose high level information about their Internal Capital Adequacy Assessment Process (a process banks follow to determine the appropriate level of capital to hold taking into account all risks, not just those captured by prescribed quantitative capital requirements).
Some aspects of the Basel II regime are still in the early stages of development (such as the Internal Capital Adequacy Assessment Process described above), and some refinements can be expected as arrangements are bedded down.
Although the Reserve Bank's quarterly disclosure regime has been in place since 1996, the shift from Basel I to Basel II, and the recent introduction of the New Zealand equivalents to International Financial Reporting Standards, place extra demands on banks' systems. As noted in the May 2008 Financial Stability Report, the Reserve Bank is comfortable with banks managing these demands by exercising some flexibility as provided for in the disclosure Orders in Council at the initial stage of Basel II implementation.
For further information contact
External Communications Adviser
Ph 04 471 3767, 021 222 5225, [email protected]