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

 

Testing And Decontamination: New Standard On Meth Residue

Standards New Zealand has today released NZS 8510:2017 Testing and decontamination of methamphetamine-contaminated properties ... More>>

ALSO:

Mince, Etc: US Food Poisoning Lawyer At Conference

As New Zealand chefs, food experts, and MPI debate what constitutes a cooked beef burger, leading US food safety litigator Bill Marler, who made his name prosecuting the burger company responsible for a major E. coli outbreak, is keynote speaker at the Food Integrity Conference. More>>

ALSO:

Petya: New Ransomware Campaign Hits Worldwide

A new ransomware campaign known as Petya is affecting computer networks using Microsoft Windows. It was first seen affecting systems in the Ukraine, but is quickly spreading across other computer networks in Europe. More>>

ALSO:

Skodafone Goneski: Sky TV, Vodafone Drop $3.44 Billion Merger Plan

Sky Network Television and Vodafone New Zealand have terminated their merger agreement which aimed to create the country's largest telecommunications and media group, and have withdrawn an appeal against the Commerce Commission's rejection of the plan. More>>

Quake Insurance: Reforms To EQC Act Announced

· Increasing the monetary cap from $100,000 (plus GST) to $150,000 (plus GST) for EQC building cover.
· Clarifying EQC land cover is for natural disaster damage that directly affects the insured residence or access to it... More>>

ALSO: