Deloitte to report to the Reserve Bank in November
TSB Bank has been required to commission an independent report into how it calculates and reports its capital and liquidity ratios, the Reserve Bank of New Zealand (RBNZ) announced.
The notice comes days before Heartland shareholders vote on a proposed takeover of the bank.
The RBNZ issued the notice under Section 95 of the Banking (Prudential Supervision) Act 1989 after TSB itself identified and reported the issues. Section 95 lets the central bank demand an outside review, by a reviewer it approves, when it wants an independent check on how a bank operates.
TSB has appointed Deloitte, and a final report is due to the RBNZ in November. A draft is expected by the end of October, according to TSB's statement on the review, which said the review will focus on ongoing compliance after the merger. The RBNZ said it could not comment further while the prudential matter is ongoing.
Merger vote proceeds
Heartland Group Holdings plans to buy TSB from the Toi Foundation for $620 million and merge the two banks as TSB Heartland Bank. Heartland told the NZX in a statement the review relates to TSB, and its shareholder meeting will go ahead as planned on 30 September.
"We take regulatory matters very seriously," Heartland chief executive Andrew Dixson said. He said Heartland would factor the findings into its view of the deal. Heartland cautioned that findings materially different from current understanding could still stop the deal completing, even if shareholders back it.
What TSB has disclosed
In its disclosure statements, TSB has said an internal review found it had classified some funding balances as non-market funding when they should have been treated as market funding. That meant it had been non-compliant with a condition of its banking registration since 2010, although it says its liquidity ratios stayed above regulatory minimums throughout.
TSB has also said it calculated capital using loan-to-value ratios set at origination, rather than recalculating them each reporting period. It says those capital issues were resolved as at 30 September 2025.
TSB said its current liquidity and funding positions are sound and that it remains well capitalised.
A second regulatory issue this month
The review follows a formal warning to TSB from the Financial Markets Authority (FMA) earlier this week, after the bank overcharged fees on 7,309 business cheque accounts between 2017 and 2023. TSB has repaid $1.73 million.
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