Authorisations for the use of restricted words by overseas banks

Status: Status: The Reserve Bank has published two guidance notes relating to the use of restricted words by unregistered overseas banks carrying on activities in New Zealand (restricted words include “bank’ and its derivatives such as “banker” and “banking”).

28 August 2019

The Reserve Bank has issued the Reserve Bank of New Zealand Act (Overseas Banks) Class Authorisations Notice 2019 (the class authorisation) under section 65 of the Reserve Bank of New Zealand Act 1989 (the Act).

Subject to conditions, the class authorisation permits unregistered overseas banks to use restricted words when carrying on certain prescribed forms of wholesale business in New Zealand. The conditions include requirements for affected overseas banks to provide certain information to the Reserve Bank. The authorisations for different types of wholesale business have set expiry dates to ensure that they are reviewed with an appropriate level of frequency.

The class authorisation forms a package of measures along with the guidance notes recently published by the Reserve Bank on:

  • how the Reserve Bank will assess whether an overseas bank is carrying on an activity in New Zealand, and therefore covered by the restrictions on the use of restricted words in Part 4 of the Act; and
  • how the Reserve Bank will assess when to authorise an unregistered overseas bank, or class of unregistered overseas bank, to use restricted words while carrying on an activity in New Zealand.

Collectively these measures are designed to provide greater certainty and transparency about how overseas banks wishing to use restricted words in New Zealand are treated.


8 August 2019

The Reserve Bank has published two guidance notes relating to the use of restricted words by unregistered overseas banks carrying on activities in New Zealand.

The first, Guidance note for overseas banks on limitations on the use of restricted words (PDF 64KB), sets out how the Reserve Bank will assess whether an overseas bank is carrying on an activity in New Zealand, and therefore covered by the restrictions on the use of restricted words in Part 4 of the Reserve Bank of New Zealand Act 1989. The second, Guidance note on the Reserve Bank’s approach to section 65 authorisations for overseas banks (PDF 384KB), sets out how the Reserve Bank will assess when to authorise an unregistered overseas bank, or class of unregistered overseas bank, to use a restricted word while carrying on an activity in New Zealand. The Reserve Bank will also shortly be:

  • issuing a class authorisation permitting the overseas banks, subject to conditions, to carry on certain types of wholesale business in New Zealand without being registered here as a bank; and
  • establishing a public register of overseas banks able to use restricted words while carrying on certain forms of business in New Zealand without being registered here as a bank.

Collectively these measures are designed to provide greater certainty and transparency about how overseas banks wishing to use restricted words in New Zealand are treated. Importantly, they do not materially change the existing approach to when unregistered overseas banks may use restricted words while carrying on activities in New Zealand (for example, overseas banks carrying on retail business in New Zealand will be required to become registered banks for this purpose).


11 April 2018

The Reserve Bank has had a practice of providing non-objection letters to small numbers of overseas banks that are not registered as banks in New Zealand. These letters allow them to carry on limited activities in New Zealand using names or titles that include restricted words under the Reserve Bank of New Zealand Act 1989 (the ‘Act’). Restricted words include “bank’ and its derivatives such as “banker” and “banking”. The Reserve Bank intends to move away from the use of non-objection letters, and instead use authorisations issued under section 65(1) of Act. At the same time, the Reserve Bank is reconsidering the criteria it will apply when considering applications from overseas banks to carry on activities in New Zealand using a name or title that includes a restricted word.

The Reserve Bank has published a consultation document on its proposals. These include publishing a register of authorised banks on the Reserve Bank’s website, and generally preventing overseas banks authorised under section 65(1) from carrying on retail activities in New Zealand. There are two guidance notes included in the consultation document. The first explains the Reserve Bank’s interpretation of when an overseas bank will be “carrying on an activity in New Zealand” and therefore require a section 65(1) authorisation to use restricted words in New Zealand without registering as a bank here. The second explains the Reserve Bank’s approach to considering applications for section 65(1) authorisations.

The move to formally rely on section 65(1) authorisations, and publication of guidance, is intended to provide a more rigorous and transparent process for determining when an overseas bank may use restricted words in New Zealand without registering as a bank here. The Reserve Bank is not intending to increase the scope for overseas banks to carry on activities in New Zealand without being registered. The Reserve Bank’s default position continues to be that any overseas bank intending to carry on activity in New Zealand should register. Authorisations will be provided on an exceptional basis, and only where the planned activity and presence of the overseas bank is sufficiently limited.