Feedback Sought On Policy For Branches Of Overseas Banks

The Reserve Bank of New Zealand – Te Pūtea Matua is inviting feedback on the second and final consultation on the review of its policy for branches of overseas banks.

Branches of overseas banks can be an important link between our economy and global financial markets. The objective of the review is to create a simple, coherent and transparent policy framework for branches that protects and promotes financial stability.

Promoting a strong, efficient and inclusive financial system is fundamental to the overall resilience of the New Zealand economy, Deputy Governor and General Manager for Financial Stability Christian Hawkesby says.

To maintain a healthy and vibrant financial system we need Te Pekanga – our regulated entities, including branches of overseas banks – to be sound, innovative and have constructive working relationships with us.

Key proposals outlined in the paper include:
 

• that all branches in New Zealand be restricted to engaging in wholesale business (that is with corporates, institutions and other wholesale investors), meaning they could not take retail deposits or offer products or services to retail customers;
• to limit the maximum size of a branch to NZ$15 billion in total assets; and
• that we continue to allow the dual registration of branches, provided:
  • the relevant subsidiary and branch are sufficiently separate, and any identified risks are mitigated by specific conditions of registration; and
  • dual-registered branches only conduct business with large wholesale customers – those with consolidated turnover greater than NZ$50 million.

We anticipate final decisions on the review to be taken in early 2023 after submissions on the second consultation have been considered. We are proposing a three-year transition period for full implementation.

The first consultation paper was published in October 2021 and set out the objectives, problem definition, assessment principles, and some high-level policy options and questions. We would like to thank the banking industry and other stakeholders for their feedback to the first consultation and engagement with the review process to date. Alongside the second consultation paper, we have also published a summary of submissions in response to the first consultation paper.

We welcome submissions on the policy questions set out in our Branch Policy consultation, and any alternative options or proposals, to be made before 16 November 2022. We will also be hosting a webinar on Wednesday 31 August 2022. Any interested parties are welcome to attend. To register your interest, please email

BranchPolicyReview@rbnz.govt.nz

The publication packages includes three documents:

• The second and final consultation paper, with a proposed Banking Prudential Requirements document for changes and proposed amendments to BS1 both appended.
• A summary of submissions in response to the first consultation paper.
• Full submissions in response to the first consultation paper.

© Scoop Media