Sharechat Logo

RBNZ says ANZ has to hold more capital against housing and farm lending

Wednesday 29th May 2019

Text too small?

The Reserve Bank has imposed new conditions of registration on ANZ Bank requiring it to hold more capital against housing and farm lending from June 30.

In its latest Financial Stability Report, the central bank says it has set minimum risk weights for ANZ, New Zealand’s largest bank, on the two lending categories.

“Risk weights measure the riskiness of loans within a portfolio and determine capital requirements,” RBNZ says.

“Minimum risk weights for ANZ were set following the conclusions of the Reserve Bank’s benchmarking project. This project assessed the conservatism of housing and rural credit risk models used by banks accredited to model their own credit risk capital requirements,” it says.

Only the four major banks, which are all owned by Australia’s major four banks, are allowed to use their own internal models to calculate capital.

In February, RBNZ revealed that the advantage ANZ gains from using internal models meant ANZ was only required to hold slightly more than half the capital that the government-owned Kiwibank needs to back each $100 of mortgage lending.

Kiwibank, along with all the New Zealand-owned banks, is required to use standardised models.

The latest restrictions on ANZ follow RBNZ’s announcement earlier this week that ANZ was going to have to use the standardised model to calculate operational risk capital (ORC) from now on because it had been using an unapproved ORC model since December 2014.

The ORC model is one of about 45 internal models ANZ uses.

(BusinessDesk)

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Deposit protection reduces case for RBNZ's bank capital increases, Robertson hints
NZ dollar higher after Lowe comments viewed as less dovish
Govt to introduce deposit insurance; RBNZ keeps prudential supervision
Granular approach needed for cost-effective emissions reduction
Bank executive incentives a key focus for regulators
Appeal Court puts ANZ back in the gun over interest rate swaps
Meridian to supply Australian online retailer Kogan.com
RBNZ seen keeping rates on hold but signalling more cuts to come
RBNZ demands assurance ANZ New Zealand is operating prudently
Citic gets seat at Tourism Holdings in $80 mln capital raising

IRG See IRG research reports