Material breaches of key bank prudential requirements

 Page published: 24 December 2020

New Zealand registered banks are required by the Reserve Bank to meet a number of key prudential requirements. Banks are required to formally report breaches of these requirements to the Reserve Bank.

This page lists breaches which in the Reserve Bank’s opinion are material. More detail on each breach can be found by clicking on the bank name.

This page lists breaches starting from 1 January 2021. Any breach displayed on this page will be deleted 5 years after it has first been published.

Previous disclosure of breaches
This page shows material breaches which the bank in question first became aware of on or after 1 January 2021. A bank must also include information on breaches of its conditions of registration in its published disclosure statements. For reporting dates up to 31 December 2020, in its disclosure statement for the reporting period, each bank was required to include information on every breach of its conditions during that period. For reporting dates from 31 March 2021 onwards, a bank must include in its disclosure statements those breaches of its conditions that have been judged by the Reserve Bank to be material and listed on this page. Banks must make their disclosure statements available on their websites - view a list of New Zealand registered banks.

This refers to the broad policy area of the prudential requirement that the breach relates to. Most prudential requirements are imposed on banks by means of conditions of registration, and a bank that is not fully compliant with a particular prudential requirement will be in breach of the related condition of registration. Every bank is also subject to a notice issued by the Reserve Bank under section 80 of the Reserve Bank of New Zealand Act 1989, requiring it to maintain a credit rating from an external rating agency. A breach is shown as “Credit rating” in this column if a bank is not complying with a section 80 notice.

Period of breach
This shows the date on which the bank was first in breach of the requirement, and the end-date if the bank is no longer in breach. Depending on the nature of the breach, it may not be possible to give exact start and end-dates, in which case broader date ranges may be shown.

Date bank aware
A bank is deemed to be aware of a breach once one or more directors or senior managers of the bank have actual knowledge of the facts that mean that disclosure may be required.

Status of breach
The status of a breach is either “open” if the bank is still in breach of the requirement, or “closed” if the bank is no longer in breach of the requirement. A breach will usually be closed because the bank has taken steps to remediate it, but in some cases other events may lead to the same outcome.

Further background

The Reserve Bank has published a guidance document (PDF 780KB), mainly aimed at registered banks, which sets out more detail on their obligation to report breaches to the Reserve Bank. This includes guidance on the threshold for breaches to be considered material, and hence needing to be published on this page.