RBNZ releases final Basel III standards
The Reserve Bank of New Zealand has released its final capital adequacy standards, confirming it will stick with the agreed timetable for Basel III implementation.While the US and Canada are delaying implementation until an unspecified date later in 2013, New Zealand is going ahead.Canada also released its final Basel III Rules yesterday, and Australian prudential regulator APRA has signalled it also plans to stick with a 1 January launch.The RBNZ will implement the agreed Basel III ratios, requiring all locally incorporated New Zealand banks to hold common equity tier 1 capital equal to 4.5 percent of risk-weighted assets and total capital of eight per cent of risk-weighted assets. All New Zealand banks are expected to meet these standards without difficulty.The Basel III standards are to be phased in over several years. Those finalised by the RBNZ yesterday set higher minimum capital requirements and define what "capital" actually includes.The RBNZ also confirmed yesterday that New Zealand will introduce a counter-cyclical capital buffer in 2014. The buffer is designed to rein in over-exuberant lenders by raising the amount of capital banks must hold in times of fast credit growth.The RBNZ also said that new disclosure requirements would take effect from 31 March 2013, while counterparty credit risk requirements would take effect sometime in early 2013. Both sets of requirements are yet to be finalised.