Banks registered in New Zealand are required to meet certain conditions of registration. The document below sets out the standard conditions of registration for a registered bank. This excerpt is from Banking Standard 1: Statement of Principles (BS1). Please note that this document has been updated from the version in BS1 to remove Covid-era restrictions.
How the standard conditions apply to banks
The standard conditions for New Zealand incorporated banks vary. It depends on whether:
- a bank’s capital requirements for credit risk are calculated entirely under the standardised approach, or
- a bank is accredited to use the internal models based approach to calculate credit risk for some of its exposures.
The actual conditions of registration imposed on an individual bank may vary depending on the circumstances of the bank. These conditions can be found in banks' disclosure statements, which we link to from our list of registered banks.
The standard conditions also provide for conditions that are part of our macro-prudential toolkit. These conditions are:
- the countercyclical capital buffer included within the prudential capital buffer ratio, and
- conditions imposing restrictions on high-LVR residential mortgage lending.
These tools may be deployed at particular times, based on judgements we make about system-wide risks. For example, the countercyclical capital buffer is due to be added to conditions in 2028 as part of the transition to higher capital requirements. Restrictions on high-LVR residential mortgage lending may also be imposed if indicators such as rapid price rises and loosening credit standards in the housing market point to an increase in system-wide risk.
A number of the conditions refer to documents in the Banking Supervision Handbook series (BS3 up to BS19) or the Banking Prudential Requirements series (BPR100 to BPR 160). Any of these documents may be updated from time to time, and the most recent version of each is available on our website.
The actual conditions imposed on a bank specify by date which version of each document is being referred to. For the BS documents, the version date is given in the condition, and these are shown below with a [month year] placeholder. For the BPR documents, the version dates are all given in a table at the end of the conditions.