Review of the capital adequacy framework for registered banks

Release date
06/07/2018

Status: We have responded to feedback on the calculation of risk-weighted assets.

Consultation period: 2017 - 2018

6 July 2018

The Reserve Bank sought feedback on the calculation of risk weighted assets (‘RWA’). The components of RWA are credit risk, operational risk and market risk. Qualifying banks are permitted to use models to calculate RWA, while remaining banks use the ‘standardised approach’. Submissions closed on 19 March 2018.

On 6 July, the Reserve Bank published its response to submissions.

Submissions for publication

On 6 July 2018 the Reserve Bank published the individual responses received as part of the consultation on risk weighted assets, where consent to do so was provided by submitters.

TSB also provided a response but asked that it not be publicly released.

19 December 2017

The Reserve Bank is seeking feedback on the options for calculating risk weighted assets.

Note: the submission period has now been extended to 19 March 2018.

14 July 2017

The Reserve Bank sought feedback about what type of financial instruments should qualify as bank capital. The consultation was about the nature of financial instruments that are suitable, rather than the amount of capital that banks must hold. Submissions closed on 8 September 2017.

On 19 December, the Reserve Bank published its response to submissions.

Submissions for publication

On 7 November 2017 the Reserve Bank published the individual responses received as part of the consultation, where consent to do so was provided by submitters.

BNZ also provided a response but asked that it not be publically released.

1 May 2017

The Bank published an issues paper on the review. The paper outlines the topics that the Reserve Bank plans to consider as part of the review and the main issues it has identified within each topic.

The issues paper was the first consultation document. The Reserve Bank sought views about whether or not the range of topics and issues in the issues paper was complete, and whether there are certain issues that should be prioritised.

Submissions closed on 9 June 2017.

Submissions for publication

On 19 October 2017 the Reserve Bank published the individual responses received as part of the consultation, where consent to do so was provided by submitters.

BNZ, Kiwibank and Westpac also provided responses, but asked that they not be publically released.

Background

The review of the capital adequacy framework aims to identify the most appropriate capital adequacy framework for locally incorporated registered banks, taking into account experience with the current framework and international developments.