'Idiosyncratic' NZ regulator hikes tier one needs

By Jasper Cox
19 Dec 2018

The Reserve Bank of New Zealand has unveiled the latest plank of its highly unusual approach to bank capital regulation. Under the proposed changes, the four large subsidiaries of Australian banks that operate in the country will have to raise billions of tier one capital and will be able to rely on loss-absorbing debt instruments far less than peers in other jurisdictions.

It expects the proposals will raise capital requirements by between 20% and 60%, equivalent to about 70% of the sector’s expected profits, and this will take place over a five year transition period.

The regulator released its proposals on Friday in a consultation paper and is seeking public ...

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