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Further consultation essential on bank capital proposals

Further round of consultation essential on bank capital proposals

Source: BusinessNZ

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BusinessNZ is calling for a further round of consultation on the Reserve Bank’s capital adequacy decisions made today.

Chief executive Kirk Hope says New Zealand’s major financial institutions are already well capitalised and managed.

"Imposing additional requirements on banks will adversely harm their customer base and the costs of reducing risk will be passed on to businesses, households and rural borrowers," Mr Hope says.

In its submission on the Reserve Bank consultation document, BusinessNZ recommended that any moves towards increased bank capital requirements be made with caution.

"The Reserve Bank has taken on board some of the concerns of the business community in respect to the timing of the proposed change, like extending the period for banks to reach the new capital requirement over seven years rather than the five years."

However, while the Reserve Bank has undertaken a cost/benefit analysis, there has been no chance for interested parties to have input.

"Given the significance of this on consumers, households, businesses, and the rural sector that will ultimately bear the brunt of increased costs and/or restrictions on capital. A further round of consultation is needed," Mr Hope says.

ENDS

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