Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


RBNZ plans bank stress testing to monitor sector’s health

RBNZ plans bank stress testing to monitor sector’s health in event of downturn

By Paul McBeth

May 14 (BusinessDesk) - The Reserve Bank is developing a stress testing framework for the nation’s lenders to gauge their health in the event of a downturn.

The measure became commonplace since the global financial crisis as bank regulators tested the individual strength of lenders in the event of another crisis, and New Zealand’s Reserve Bank wants to set up its own regime which it expects will “form a key component of the Reserve Bank’s prudential and financial stability framework,” it said in its six-monthly financial stability report.

The central bank is developing the initiative to assess the impact of emerging risks to the financial system, develop capability in identifying and responding to those risks, and provide prospective on the adequacy of lenders’ capital buffers, it said.

“As well as providing an indication of the resilience of these institutions in an economic downturn, the exercise is designed to strengthen the stress testing capability of these institutions,” the report said. “As capability grows, the Reserve Bank expects stress testing to extend beyond credit portfolios, and to become entrenched as a regular part of risk management process.”

Registered banks are already required to conduct internal tests, and subsidiaries of the major Australian-owned lenders have participated in the Australian Prudential Regulatory Authority’s regime.

The central bank’s report found New Zealand’s banking system was sound, with impairments on non-performing assets only just above the June 2006 low. The reduction in bad debt was largely in rural and commercial property sectors, while the housing sector continued to have the lowest share of non-performing loans.

Bank profitability was back to pre-GFC levels, largely due to the fall in impairment charges, and future earnings would “likely be influenced by how borrowers respond to the outlook for higher domestic interest rates.”

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Copper Broadband: Regulator Set To Keep Chorus Pricing Largely Unchanged

The Commerce Commission looks likely to settle on a price close to its original decision on what telecommunications network operator Chorus can charge its customers, though it probably won’t backdate any update. More>>

ALSO:

Lower Levy For Safer Cars: ACC Backtracks On Safety Assessments

Dog and Lemon: “The ACC has based the entire levy system on a set of badly flawed data from Monash University. This Monash data is riddled with errors and false assumptions; that’s the real reason for the multiple mistakes in setting ACC levies.” More>>

ALSO:

Fast Track: TPP Negotiations Set To Accelerate, Groser Says

Negotiations for the Trans-Pacific Partnership will accelerate in July, with New Zealand officials working to stitch up a deal by the month's end, according to Trade Minister Tim Groser. More>>

ALSO:

Floods: Initial Assessment Of Economic Impact

Authorities around the region have compiled an initial impact assessment for the Ministry of Civil Defence, putting the estimated cost of flood recovery at around $120 million... this early estimate includes social, built, and economic costs to business, but doesn’t include costs to the rural sector. More>>

ALSO:

Food: Govt Obesity Plan - No Tax Or Legislation

Speaking to Q+A’s Corin Dann this morning, health minister Jonathan Coleman said tackling obesity was at the top of the Government’s priority list, but there was “no evidence” a sugar tax worked, and further regulation was unnecessary. More>>

ALSO:

Treasury Docs On LVR Policy: Government Inaction Leads To Blurring Of Roles

The Treasury wouldn’t have had to warn the Reserve Bank to stick to its core functions if the Government had taken prompt and substantial measures to rein in skyrocketing Auckland house prices, Labour’s Finance spokesperson Grant Robertson says. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news