Covered bonds background

On 10 December 2013 the law on covered bonds came into force, by virtue of the Reserve Bank of New Zealand (Covered Bonds) Amendment Act 2013.

Background

In October 2012 the Reserve Bank released a Consultation document entitled Covered bonds: application process and information requirements (PDF 148KB). Submissions closed 16 November 2012.

In September 2012 the Finance and Expenditure Select Committee reported back to the House of Representatives on the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill 2012. The Select Committee's report and the advice of the Reserve Bank to the Select Committee can be viewed at: http://www.parliament.nz/en-nz/pb/legislation/bills/00DBHOH_BILL11373_1/reserve-bank-of-new-zealand-covered-bonds-amendment-bill

In May 2012, the Minister of Finance issued a press release (PDF 27KB) announcing the introduction to the House of the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill.

Following approval by Cabinet in April 2012, the Reserve Bank has released a Cabinet paper and Regulatory Impact Statement (PDF 193KB) confirming policy positions relating to the matters discussed in the Reserve Bank's December 2011 consultation paper on covered bonds.

In April 2012, the Reserve Bank published a summary of submissions received on the December 2011 consultation paper on covered bonds (PDF 139KB). This summary also provided feedback on the Reserve Bank's decisions on proposals in the consultation paper. The December 2011 consultation paper (PDF 188KB) proposed a legislative framework for the issuance of covered bonds. This paper builds on the prior consultation undertaken in October 2010. The purpose of the framework is to provide legal certainty as to the treatment of assets in the cover pool if an issuing bank becomes insolvent.

In March 2011 the Reserve Bank imposed a 10% limit on the issuance of covered bonds by locally-incorporated registered banks, by adding a new condition to their conditions of registration. This implemented the decision announced by the Reserve Bank in a news release in January 2011. Also in March 2011 the Reserve Bank published a paper summarising the submissions on the October 2010 consultation paper on covered bonds (PDF 78KB), and providing feedback on the Reserve Bank's decision on regulatory limits.

In October 2010 the Reserve Bank issued a consultation paper (PDF 197KB) on the introduction of a regulatory framework for the development of covered bond programmes by New Zealand banks. This consultation closed on 19 November 2010.