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Registered Bank Category Period of breach Date registered bank become aware  Status
Westpac New Zealand Limited Condition of Registration – Open Banking Resolution Estimated 2022 – Present March 2023 Open 

Open Bank Resolution (OBR) Policy is a Reserve Bank tool for responding to the rare event of a bank failure. OBR enables authorities to re-open a failed bank the next day under statutory management. The basic idea is to provide customers access to their accounts as swiftly as possible so they can carry on making and receiving payments. This is achieved by ensuring that banks have operational and technical arrangements in place so they can continue to operate should they enter into statutory management.

Westpac New Zealand Limited’s (WNZL) Conditions of Registration 18, 19, and 21 require WNZL to (i) be prepositioned for OBR; (ii) have an Implementation Plan (Plan) that meets the pre-positioning requirements set out in the OBR Pre-Positioning Requirements Policy (OBR Policy); and (iii) have a regular process to test that the pre-positioned arrangements work as intended and ensure durable compliance with the OBR Policy.

WNZL identified that components of its OBR Plan were non-compliant with WNZL’s Conditions of Registration in the following respects:

  • WNZL has not met all of the pre-positioning requirements in Condition of Registration 18 as WNZL does not have a fully documented solution to reinstate customers’ access to some or all of their residual frozen funds were an event to occur.
  • Components of WNZL’s Implementation Plan were historically not kept up to date. As such WNZL has not met all of the requirements of Condition of Registration 19.
  • WNZL’s annual testing of its Implementation Plan did not meet the requirements of Condition of Registration 21 as the testing methods required strengthening to include timeframe and end-to-end enterprise testing.

As a result of the above, there is an increased risk that WNZL would not be able to close and re-open as required under the OBR Policy.

The root cause of the non-compliance was a failure to maintain robust controls and governance processes around WNZL’s OBR Plan, ensuring it was reviewed, updated, and tested appropriately on an annual basis.

Through a dedicated initiative, WNZL’s OBR Plan has since been updated and there has been significant progress made to rebuild, uplift, test, and strengthen the relevant components of WNZL’s OBR Plan, including the accountability and governance of regular testing.