Sections 23-24 of the Non-bank Deposit Takers Act 2013 (the Act) require licensed NBDTs to have a credit rating from an approved rating agency, and provide for regulations to specify the type of credit rating that is required.
Credit ratings provide a simple way to inform the public of a licensed NBDT's risk profile and facilitate comparison of risks across the sector. The requirement is intended to strengthen the incentives for NBDTs to develop and maintain sound governance and risk management practices.
Credit rating requirements
Under the Act and the Deposit Takers (Credit Ratings, Capital Ratios, and Related Party Exposures) Regulations 2010 licensed NBDTs must have a local currency (New Zealand dollar), long-term, issuer rating, given by an approved rating agency.
The Reserve Bank has approved the following rating agencies for the purposes of the Act:
- Equifax Australasia Credit Ratings Pty Limited (formerly known as Corporate Scorecard Pty Limited (CSC));
- Fitch Ratings;
- Moody's Investors Service; and
- Standard and Poor's Ratings Services.
Guidelines for approval of credit rating agencies
Guidelines for credit rating agencies wishing to apply for approval are found in the Guidelines for credit rating agency approval for the non-bank deposit taker sector