Reserve Bank announces policy review for overseas banks

It is seeking industry feedback

Reserve Bank announces policy review for overseas banks

The Reserve Bank of New Zealand (RBNZ) will review its policy for overseas banks’ branches in the country to adapt to the evolving global regulatory environment.

Deputy Governor and General Manager for Financial Stability Geoff Bascand explained that the review aims to create a simple, coherent, and transparent policy framework for branches of overseas banks, including ANZ Banking Group Limited, Bank of China, Commonwealth Bank of Australia, Westpac Banking Corporation, and ASB Bank Limited.

“Overseas branches are a growing part of our financial system, and it is timely to ensure their regulation and supervision promotes financial stability and that we are well placed to avoid significant damage to the financial system that could result if one failed,” Bascand said.

Read more: Reserve Bank seeks industry feedback on enforcement framework

Currently, 12 branches of overseas banks are registered and operating in New Zealand. The first branches that RBNZ supervised were registered in 1987, while the most recent was registered in 2020 – and the central bank emphasised that global regulatory requirements have evolved significantly over that time.

“Branches of overseas banks can be an important link between our economy and global financial markets. They provide valued services to New Zealand businesses and households and greater diversity to our banking system. But they can also pose special risks,” Bascand said.

“We have launched a review of our current branch policy as in its present form it is not applied consistently to all the branches we supervise; and there are inherent limitations on our ability to apply our regulatory standards to all branches and to supervise them effectively.”

RBNZ seeks submissions on the policy questions set out in its Branch Policy consultation and any alternative options or proposals until March 02, 2022.