Reserve Bank of New Zealand (RBNZ) has published the finalised bank capital adequacy requirements implementing the decisions made during an earlier review.

The new rules are outlined in the Banking Prudential Requirements (BPR) documents. It increases the amount of capital that the banks must hold.

According to the central bank, the move will help in making the country’s banking system safer for the people.

The changes will be implemented over a seven-year period starting from July next year. Other changes will be phased in from October 2021 onwards.

RBNZ Deputy Governor and General Manager of Financial Stability Geoff Bascand said: “In response to feedback from banks, we’ve also improved the way the rules are structured, presenting them as a series of Banking Prudential Requirements, rather than changing a ‘Handbook’. This will ensure the rules are more transparent and easier to follow.

“The regulatory framework for capital is now more up-to-date, logical and transparent. Banks will find it easier to understand our expectations and comply with them.

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“The documents are extensive and incorporate valuable feedback from banks’ engagement with earlier drafts of the documents which we are grateful for.”

In April, RBNZ established a new standalone enforcement department. The department is working alongside the central bank’s supervision team to achieve compliance goals.