DTA standards implementation roadmap

This standard will impose specific responsibilities on boards of locally incorporated deposit takers, and will put requirements on the make-up of those boards. It will also specify the responsibilities of the New Zealand Chief Executive Officers of branches, and set suitability requirements for directors and senior managers of all deposit takers. Applicable to all groups and branches.

This standard sets out the key components of a sound risk management framework that every deposit taker will be required to have in place. It will also require a deposit taker to have adequate processes and information systems to allow it to monitor all important risks that it faces, supported by sufficient staff with appropriate authority and independence. Applicable to all groups and branches.

This standard will specify the information that deposit takers must make publicly available, and how and when they must do so. The aim is to support market discipline by helping depositors and interested professional parties make informed decisions about a deposit taker’s risk profile. Applicable to Group 1, Group 2 and branches.

This standard will put limits or conditions on specified activities that may pose risks to individual deposit takers involved in them. The activities are insurance underwriting, carrying out non-financial business, issuing covered bonds, and setting up an overseas business. Applicable to all groups and branches.

This standard will contain the requirements for private reporting by deposit takers to disclose financial and prudential information to the Reserve Bank. Applicable to all groups and branches.

This standard will impose minimum levels of capital, loss absorbing capacity and prudential buffers measured against the key risks that the entity faces. Applicable to all groups and branches.

This standard has been split out from the Capital Standard. It will set out the requirements for deposit takers that are accredited by the Reserve Bank to use internal models to calculate components of credit risk weights. Currently only applicable to Group 1.

This standard will require each deposit taker to manage its operational risk, by assessing its risk profile and having effective risk controls and incident reporting. There will also be requirements on business continuity planning, and the management of risks arising from information and communication technology (including cyber risks), and the use of material service providers. Applicable to all groups and branches.

This standard will be adapted from our current Outsourcing Policy for banks, which addresses the risks arising when a bank uses another party to perform business functions that it would normally undertake itself. The policy aims to ensure that a bank can continue to provide a basic level of banking services to customers even if it has failed. Only applicable to deposit takers that are subject to the Outsourcing Policy for banks on the date that DTA standards come into effect. Currently this is Group 1 and a subset of Group 2.

This standard sets out requirements relating to a deposit taker’s transactions with persons closely related to the deposit taker or to its governance or management. It defines ‘related party’, requires a deposit taker to transact with related parties on the same terms they would with anyone else, and sets limits on the deposit taker’s total related party exposures as a percentage of their Tier 1 capital. Applicable to Group 1, Group 2 and Group 3 (not applicable to branches).