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

 

Reserve Bank should rethink capital proposals

20 May 2019

Reserve Bank should rethink capital proposals

The New Zealand Bankers’ Association has called on the Reserve Bank to reconsider its proposals to almost double capital requirements for New Zealand’s banks, and take into account an independent review by former Treasury Secretary Dr Graham Scott.

“Independent analysis by former Treasury Secretary Dr Graham Scott shows the Reserve Bank should rethink its proposals to avoid putting a handbrake on our economy,” says New Zealand Bankers’ Association chief executive Roger Beaumont.

“The review we commissioned from Sapere, and led by Dr Scott, expresses a valid concern that the Reserve Bank hasn’t yet done a cost-benefit analysis. It found that the Reserve Bank proposals are excessive and will cost households, businesses and our economy around $1.8 billion a year. That’s a conservative estimate of costs based on the Reserve Bank’s assumptions. The cost to our economy could be much higher.

“While we absolutely support a strong and stable banking system that’s able to withstand significant shocks, that shouldn’t be at the expense of everything else. Our banks are already well-capitalised and strong by international comparisons and Dr Scott’s work suggests that the Reserve Bank has significantly underestimated the negative consequences for our country.

“The proposals as they currently stand would require New Zealand’s banks to hold more capital than almost any other bank in the world. The impact of this move on households and businesses will be fundamental and could restrict lending.

“In our view a smaller increase in the capital required with an extended timeframe for implementation, combined with banks having options other than only shareholder equity to meet the capital requirements, would more efficiently meet the Reserve Bank’s aims.”

NZBA’s response to the Reserve Bank’s consultation paper is available here.

Underpinning and attached to this submission are two reports commissioned by NZBA:
Sapere report (May 2019): How much capital is enough – a review of Reserve Bank Tier 1 capital proposals
PwC report (May 2019): International comparability of the capital ratios of New Zealand’s major banks – update paper

ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 


Tegel: Chicken Prices On The Rise But It’s Still The Favourite Protein For Kiwi Families

A combination of domestic and international factors is forcing New Zealand’s largest poultry supplier Tegel to raise its prices from July. The roughly 10% price rise is a result of ongoing cost pressures on the industry, including increases in labour... More>>

Hospitality NZ: Hospitality Wages Jump 9% To Pass Living Wage
Wages and salaries across the hospitality sector continue to increase despite businesses having to battle through some of the toughest trading periods in living memory... More>>



Climate Leaders Coalition: Launches New Statement Of Ambition, Appoints New CEO Convenor

The Climate Leaders Coalition is tonight officially launching a new Statement of Ambition to accelerate business action on climate change... More>>


MYOB: New Data Shows Increase In SMEs Experiencing Stress And Anxiety

The lingering impacts of the COVID-19 pandemic have led to a surge in the number of local SME owners and operators experiencing stress and anxiety, according to new research from business management platform, MYOB... More>>



Carbonz: Cashing In On Carbon: The New Marketplace Helping Native Forest To Thrive

The country’s first voluntary carbon credit marketplace, Carbonz, is here to restore native biodiversity and help Aotearoa reach its carbon zero goals by selling the first carbon credits exclusively from native forest... More>>
Entrust District: Dividend Will Be Welcomed After Another Tough Year
We’ve all heard of the saying; “if it sounds too good to be true, it probably is” but for Aucklanders within the Entrust District, getting their share of Entrust’s 2022 annual dividend payment really is as good as it sounds... More>>