Parliament

Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 

Safer banks and strengthened bank accountability

Hon Grant Robertson

Minister of Finance


24 June 2019

24 JUNE 2019

PĀNUI PĀPĀHO

MEDIA STATEMENT


The Coalition Government today announced moves to make New Zealand’s banking system safer for customers through a new deposit protection regime, and work to strengthen accountability for banks’ actions.

The in-principle decisions are part of Phase 2 of the Review of the Reserve Bank Act, which is making sure the 30-year old laws regulating our banking system are up to scratch.

“Now is the right time to check we have the tools to make sure banks meet their obligations to New Zealanders, and the powers to enforce them,” Grant Robertson says.

“The Government is also making sure New Zealand follows international best practice for promoting public confidence in our banking system, including on the issue of depositor protection.”

The Review of the Reserve Bank Act was agreed in the Coalition Agreement between Labour and New Zealand First. The Coalition Government has already delivered on Phase 1 of the review, by updating New Zealand’s monetary policy settings to require the Reserve Bank to focus on employment outcomes as well as price stability.

Cabinet today signed off an in-principle decision to introduce a deposit protection regime in New Zealand as a result of work under Phase 2 of the review.

“New Zealand has been an outlier for many years in that we don’t have a formal deposit protection regime to support Kiwis if a bank were to fall over,” Finance Minister Grant Robertson says.



“Our banks are safe and sound. However, the OECD and IMF have said that our banking system might be more vulnerable in a crisis because we don’t have a deposit protection regime. A deposit protection regime will increase public confidence in the banks.”

The Government is proposing a limit between $30,000 and $50,000 for the deposit protection regime. This would cover 90% of individual bank deposits in New Zealand, which is similar to international schemes. It follows consultation with the sector.

“Overseas experience shows that bank failures can be the result of a few bad decisions that normal bank customers had no influence over and no idea about. A deposit protection scheme will help protect customers like a young couple saving a deposit for a house, people saving for their retirement, or the small business operator who keeps money aside for a rainy day.”

The Government is also making sure bank regulators in New Zealand have the right tools to hold the banks and their executives to account.

Cabinet has decided that the next consultation in Phase 2 of the RBNZ review will look at whether the Reserve Bank’s supervisory regime is sufficiently strong. It will also review the enforcement tools the Reserve Bank has, including whether penalties are tough enough to discourage certain behaviour.

The Government is considering adopting elements of overseas frameworks, which would increase the responsibilities and accountabilities of senior executives for the actions of New Zealand’s banks and licensed deposit-takers.

Australia’s Bank Executive Accountability Regime and the UK’s Senior Managers Regime are two examples of frameworks that assign duties to individual decision-makers at banks, so that if things go wrong the individuals directly responsible can be identified and held to account.

“These regimes go a step further than New Zealand’s current Director Attestation Regime for banks, by also holding senior managers to account for the prudent management of their bank within their area of responsibility,” Grant Robertson says.

Final decisions on the full details of a deposit protection regime and strengthened accountability standards will be announced in early 2020. More information is available at: https://treasury.govt.nz/news-and-events/reviews-consultation/reviewing-reserve-bank-act


ends

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

SCOOP COVERAGE: CHRISTCHURCH MOSQUES TERROR ATTACK


Emission Statement: 'Consensus Reached' On Agriculture

Today the Government launched a consultation document, informed by the work of the Interim Climate Change Committee (ICCC), on how to bring agriculture into the emissions trading scheme, a key part of the Government’s plan to tackle climate change and reduce New Zealand’s emissions.

Agricultural emissions make up nearly half of New Zealand’s total emissions profile and are the largest contributor to greenhouse gas emissions in New Zealand. More>>

 

Gordon Campbell: On What’s Wrong With Wellington

For many Wellingtonians, it hasn’t been the normal hardships – the workings of central government and the lousy weather – that have recently pushed their tolerance into the red zone. It has been the inability of local government to maintain even the basics. More>>

ALSO:

$1m Compensation Paid: First Gun Ban Event In Christchurch

The Police Minister says the first ever firearms collection event in Christchurch over the weekend was a huge success. But Stuart Nash had concerns about whether the participation reflected the number of weapons in the region. More>>

ALSO:

The Kids: Youth Parliament 2019 Event Kicks Off

120 Youth MPs and 20 Youth Press Gallery members have gathered in Wellington to attend the two-day Youth Parliament event ... More>>

Friends Like These: Foreign Minister To Visit USA

Deputy Prime Minister and Foreign Affairs Minister Winston Peters will travel to Washington D.C. today for talks with senior members of the US Administration, and to attend the Ministerial to Advance Religious Freedom. More>>

ALSO:

Gordon Campbell: On The Aussie Banks’ Latest Fee Hike Excuse

When the Reserve Bank sought feedback on its plans to require the country’s major banks to raise their capital reserves then you might have expected the banks to whine and complain. And so they have. More>>

ALSO:

Sitting On Defence: Terms Of Reference For Defence Estate Review

“The 81,000 hectare Defence estate is at a crossroads; much of it is run down, and outdated,” says Ron Mark. “It needs to be improved in order to gain, train and retain our service people, now and into the future." More>>

ALSO:

Meng Foon: Retiring Gisborne Mayor To Be Race Relations Commissioner

Andrew Little: “He has an outstanding record as a relationship builder and walks comfortably in the pākehā world, the Māori world, the Chinese community and other communities making up New Zealand." More>>

ALSO:

NCEA: Students Granted Qualifications After Fees Scrapped

Almost 150,000 current and former students with unpaid NCEA fees have today been formally awarded their NCEA credits or qualifications. More>>

 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

InfoPages News Channels