RBNZ published its "in-principle decisions" on capital requirements for registered banks, as part of the review of capital adequacy in the New Zealand banking system. In this context, RBNZ also published a summary of submissions and its responses to the submissions on the consultation on calculation of risk-weighted assets (RWA). The consultation had closed on March 19, 2018.
IRB banks will be required to report RWAs (and associated credit ratios) calculated using the standardized approach, along with the RWAs arising from the IRB approach (dual reporting).
The in-principle decisions are designed to bolster the capital that banks need to hold, to make it easier for investors to assess capital adequacy, and to minimize any unintended competitive advantages. The next phase of the capital review will be a quantitative impact study of the in-principle decisions made by RBNZ so far. The final phase will address the setting of minimum capital ratios. RBNZ aims to conclude the key elements of the capital review in 2018.