The Reserve Bank of New Zealand has reached an agreement with the county's banks that they will not pay dividends on ordinary shares "until further notice".The agreement will have an impact on the big Australian banks, which all receive dividends from their New Zealand subsidiaries.The RBNZ also announced that NZ banks will not redeem non-CET1 capital instruments. These restrictions took effect yesterday under revised conditions of registration and will remain in place until further notice.The RBNZ has also introduced a term lending facility in support of the NZ Government's Business Finance Guarantee Scheme. It is designed to ensure access to funding for banks at low interest for up to three years.ANZ said it would not redeem its NZ$500 million Capital Notes on May 25. The bank will continue to make interest payments to note holders.The terms of the notes provide for conversion into ANZ ordinary shares in May this year or May 2022.Kiwibank said it would not be able to exercise an early redemption option, on May 27, to redeem its only non-CET1 instrument, a NZ$150 million additional tier 1 perpetual bond.The big Australian banks pointed out that the restriction on their NZ subsidiaries issuing dividends would only affect their Level 1 Common Equity Tier 1 capital ratios, with no effect on Level 2 CET1 ratios.Commonwealth Bank said that at the end of December, CBA had a Level 2 CET1 ratio of 11.7 per cent and Level 1 CET1 ratio of 12.1 per cent."The strong Level 1 surplus capital position means CBA is well placed to absorb the suspension of ASB dividends," the bank said in a statement.NAB said it did not "anticipate that this restriction on the payment of ordinary dividends by BNZ will have a material impact on NAB's Level 1 capital position. The restriction does not affect NAB's Level 2 capital ratio."Westpac said that at the end of December it had a Level 2 CET1 ratio of 10.8 per cent and a Level 1 CET1 ratio of 11.1 per cent.Last week, the European Central Bank recommended that banks in its jurisdiction not pay dividends until October at the earliest. It also wants them to put share buybacks on hold.Earlier this week the Bank of England followed suit.