RBNZ Raises Bank Capital as Planned, Extends Transition

XE Data Update - RBNZ Raises Bank Capital as Planned, Extends Transition
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12:48 PM (16 minutes ago)

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The Reserve Bank of New Zealand today released its final decisions of its capital framework for banks, known as the Capital Review.

The key points in report are:
• RBNZ says will go ahead with plans to force bank to increase capital ratios.
• New capital ratio requires country’s 4 large banks to hold 16% in Tier 1 Capital
• New capital ratio requires country’s 4 large banks to hold 18% in Total Capital from current minimum of 10.5%
• Time frame to meet capital ratio requirement set 7 years from July 2020, extended from 5 years
• New capital ratio requires country’s smaller banks to hold 14% in Tier 1 Capital
• Says reforms will make banking system safer
• Estimates reforms will be net beneficial to New Zealand
The NZD jumped higher in immediate response, as the reforms were not as harsh as feared.

Current indicative levels are:

NZD-USD 0.65435 / 0.6560
NZD-AUD 0.9550 / 0.9575
NZD-EUR 0.5900 / 0.5925
NZD-GBP 0.4985 / 0.5010
NZD-JPY 71.15 / 71.40

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Below is the link to the RBNZ press release:

https://www.rbnz.govt.nz/news/2019/12/higher-bank-capital-means-safer-banking-system-for-all-new-zealanders

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