The Reserve Bank of New Zealand says it is confident that none of the other Big Four-owned banks in New Zealand share the issue of non-compliant internal risk models which tripped up Westpac NZ, while casting doubt on the use of hybrid securities as capital instruments.Earlier this month, Westpac NZ had its capital requirements increased after the RBNZ found the bank had failed to comply with regulatory obligations relating to its status as an internal model bank. Internal model banks are accredited by the Bank to use approved risk models to calculate how much regulatory capital they need to hold. Westpac was relying on hybrid securities as part of its internal model bank calculations.During yesterday's Q&A session on the RBNZ's latest Financial Stability Report, the senior Reserve Bank officials cast doubt on the acceptability of hybrid securities within a bank's capital structure.The central bank is currently reviewing submissions received after it released a consultation document on the issue.  "We have received submissions and our next stage will be to come back and give a clearer indication of where we are going on the eligible capital instruments, but as indicated in our consultation document, we think there are issues around hybrid instruments and we are not particularly attracted to them," said Grant Spencer, RBNZ's acting Governor."They are complex and we are not sure they really serve a good purpose in terms of being a strong capital instrument, particularly for supporting going concern capital in a stress situation. We will talk further about this when we put out our next document [for public consultation] but our indicative direction is not supportive of the hybrid instruments."When it was pointed out that Westpac NZ was relying on hybrids as part of its internal model bank calculation, in order to meet capital requirements, when RBNZ had deemed it non-compliant, Spencer said the problem appeared to be limited to Westpac."The others [major banks] are getting their models approved and we don't have issues with those. We have been checking and we are confident that there is no repeat of the Westpac issue with the other three banks," Spencer said.Deputy Governor Geoff Bascand said the issues of the appropriateness of the internal bank model being used was flagged. "We raised issues with Westpac well before the point of their own official disclosure statement about these issues, so we had suspicions and raised the matter with them. On their own investigation they then found that they were not compliant," Bascand said."In terms of the other banks we don't have cause for suspicion.  We are encouraged that some of them are looking at their own compliance levels.""We have put Westpac on notice that if they don't comply within 18 months, if they don't get their governance models approved, then they do risk losing their accreditation status."Spencer backed up those comments with his own, re-iterating that this was viewed as "a serious case of non-compliance", met by "an appropriately strong regulatory response". He said the issue of this non-compliance "went