The bank is now on its third consultation
The Reserve Bank of New Zealand says it is close to finalising its branch policy review and is now requesting feedback on implementation considerations.
Overseas bank branches play a pivotal role in connecting the New Zealand economy with global financial markets, and by implementing the review, RBNZ aims to establish a clear, coherent, and transparent policy framework for these branches – one that safeguards and fosters financial stability.
Kate Le Quesne (pictured above), RBNZ director of prudential policy, underscored the importance of overseas bank branches in the finance sector and their ability to provide valuable services to New Zealand businesses and the broader economy.
“We have been reviewing our branch policy in recognition that the current policy has evolved over time, leading to certain inconsistencies,” Le Quesne said in a media release. “We believe these decisions strike a balance between the benefits that branches bring to New Zealand while effectively managing associated risks.”
In August 2022, RBNZ initiated a consultation process proposing new policy settings and is now unveiling key decisions from the branch review, which include:
- Limiting all branches in New Zealand to engage exclusively in wholesale business with corporates, institutions, and other wholesale investors. This restriction would prohibit them from accepting retail deposits or offering products or services to retail customers.
- Imposing a cap on the maximum size of a branch, limiting it to $15 billion in total assets.
- Allowing dual registration of branches, provided specific conditions are met, and that dual-registered branches exclusively transact business with large wholesale customers.
RBNZ has published a summary of the submissions available, along with the bank’s responses to them, as well as a regulatory impact statement. The full, redacted versions of the submissions can also be accessed on RBNZ’s official website.
In the latest development, the central bank is releasing a third consultation paper, which outlines the proposed approach to implementing various key decisions. This includes addressing the definition of large corporate and institutional customers, as well as extending the implementation timeline for these measures.
Read the review of policy for branches of overseas banks for more information.
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