Restructure of the Banking Supervision Handbook
Status: The Handbook redesign is underway.
Consultation period: 2016-2021
A key new project identified by the 2015 Regulatory Stocktake was the restructure of the Banking Supervision Handbook. The Handbook redesign is a major project that has taken place in four stages, beginning in 2016 and extending to 2021.
The first and most challenging stage of the project involved re-organising and clarifying the documents that make up the capital adequacy framework. Work progressed over 2016-19 as resourcing allowed, and benefitted from feedback from a bank working group.
As part of the work on the Capital Review, it was decided that the implementation of the Capital Review policy changes should be combined with issuing the replacement documents for the new capital adequacy framework.
The Capital Review final decisions were announced on 5 December 2019, and as part of that it was announced that exposure drafts for the new policy would be published for public consultation on 1 April 2020, to come into force on 1 July 2020.
The Reserve Bank announced a number of regulatory relief measures in response to COVID-19 on 18 March 2020, including a postponement until 1 July 2021 of the start date for the Capital Review changes. The publication of the exposure drafts was also postponed, but they were published on 17 November 2020.
The exposure drafts consist of the full set of proposed new documents dealing with capital adequacy. The intention is, as far as possible, to change the policy content of the capital adequacy framework only as far as needed to implement the Capital Review decisions. However, some areas of text where clarification is needed do raise questions of policy interpretation. These are clearly flagged in the consultation material.
The exposure drafts also form part of the roll-out of the replacement for the Banking Supervision Handbook, which is being restructured – and renamed as Banking Prudential Requirements – to re-organise and clarify the existing Handbook documents. This was one of the key areas for improvement identified during a Regulatory Stocktake that the Reserve Bank undertook in 2015.
This means that the full restructured, and renamed Banking Prudential Requirements covering capital adequacy will be in place from 1 July 2021.
Some progress has been made to date on the standardisation and rationalisation of the other Handbook documents that do not deal with capital adequacy, and work will continue on these while the capital adequacy documents are out for consultation.
The Reserve Bank plans to publish the full revamped Banking Prudential Requirements by the end of 2021.