Registered banks disclosure regime
All registered banks operating in New Zealand are required by law to publish a twice-yearly disclosure statement. These disclosure requirements are set out in Orders in Council, but are administered by the Reserve Bank of New Zealand.
Banks are required to publish disclosure statements for two main reasons:
- to strengthen the incentives for banks to maintain sound banking practices; and
- to assist depositors and other investors to make well-informed decisions on where to put their money.
To help achieve these aims more effectively, the Reserve Bank launched the new Bank Financial Strength Dashboard in May 2018. The Dashboard complements the existing registered bank disclosure regime. Unlike individual banks’ disclosure statements which banks publish on their own websites, the Dashboard shows banks’ financial information side by side on a comparable basis, and in a central location. The Reserve Bank updates the Dashboard by extracting information from statistical returns that banks submit to it. The Dashboard is updated quarterly, and only includes information from New Zealand-incorporated banks.
A bank's disclosure statement is required to contain certain statements signed by each director of the bank. These must state, among other things: whether the bank has systems in place to monitor and control adequately the banking group's material risks and whether those systems are being properly applied; and whether the bank has complied with its conditions of registration over the period covered by the disclosure statement.
These directors’ attestations are important, because they strengthen the incentives for directors to oversee, and take ultimate responsibility for, the sound management of their bank. Directors can face criminal and civil penalties under the Reserve Bank of New Zealand Act 1989 if information contained in a disclosure statement is found to be false or misleading.
A bank must make its disclosure statements readily accessible on its website. A bank must also provide copies of its disclosure statements in printed or other appropriate form, within two working days of receiving a request for copies. Banks must provide copies of their disclosure statements free of charge.
Contents of disclosure statements
A bank’s disclosure statement contains a wide range of financial and other information, and is aimed at providing a broad and reasonably up-to-date view of the bank. The disclosure statement for the bank's full financial year contains more comprehensive information than that for the half year.
A major part of a bank’s disclosure statement is taken up with the bank’s financial statements, prepared in accordance with generally accepted accounting practice. Key components at the front of the financial statements are the income statement and the balance sheet. Other important information in the financial statements includes:
- the bank’s level of impaired assets and the loan loss provisions against them;
- information on lending concentrations, to individual large borrowers, industry sectors, and geographical regions; and
- the bank’s liquidity risk profile.
Disclosure statements also report other matters not covered in the financial statements, such as the bank’s credit ratings, its Common Equity Tier 1 and total capital ratios (on a group basis), calculated in accordance with Reserve Bank minimum capital adequacy requirements, information on guarantees of the bank's obligations, and the conditions of registration that the Reserve Bank has imposed on the bank.
Some of the information is only included as a matter of course in the full-year disclosure statement, and is updated in the half-year disclosure statement if there has been a material change in the meantime.
Overseas bank branches
A bank that is incorporated overseas and operates a branch in New Zealand (rather than as a separate company) is required to disclose information both for the New Zealand branch and for the overseas bank of which it is part. This includes the financial statements for their overseas banking activities as a whole.
Overseas branches are not required to hold capital in New Zealand. However, the overseas bank is required to comply in its home country with the standard international minimum capital requirements, and must include information on this in its New Zealand disclosure statement.
The responsibilities of directors of registered banks apply equally to the New Zealand chief executive officers of overseas branches.
For members of the public interested in banks' disclosure statements, further information is available in "Your bank's disclosure statement: what's in it for you?".
Enquiries about a particular bank's disclosure statement should be made to that bank.
For summary comparative information on locally-incorporated banks, see the Dashboard.
The Reserve Bank compiles comparative tables summarising key information extracted from all registered banks' disclosure statements. From May 2018 onwards, only the comparative table for branches of overseas banks is being updated, as the Dashboard now covers locally-incorporated banks.
Go to the Statistics section
For registered banks, the disclosure requirements themselves are set out in separate Orders in Council
- New Zealand-incorporated registered banks (PDF 1.12MB)
- Overseas-incorporated registered banks (PDF 865KB)
Additional information on the Reserve Bank's expectations of disclosure statements is set out in two policy documents: