Lt Gen The Rt Hon Sir JERRY MATEPARAE, Governor-General

Order in Council

At Wellington this 16th day of February 2015

Present:

The Rt Hon JOHN KEY
PRESIDING IN COUNCIL

Pursuant to section 81 of the Reserve Bank of New Zealand Act 1989, His Excellency the Governor-General, acting on the advice and with the consent of the Executive Council and on the advice of the Minister of Finance given in accordance with a recommendation of the Reserve Bank of New Zealand, makes the following Order.

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Order

1. Title

This order is the Registered Bank Disclosure Statements (New Zealand Incorporated Registered Banks) Order 2014 Amendment Order 2015.

2. Commencement

This order comes into force on 31 March 2015.

3. Principal order amended

This order amends the Registered Bank Disclosure Statements (New Zealand Incorporated Registered Banks) Order 2014.

4. Interpretation

(1) This clause amends clause 4(1).

(2) Replace the definition of “individually impaired asset” with:

“individually impaired asset means a financial asset that is individually determined to be impaired in accordance with NZ IAS 39 or meets the definition of a “credit-impaired financial asset” in accordance with NZ IFRS 9, consistent with the impairment methodology the registered bank applies in preparing its financial statements”

(3) After the definition of “LGD”, insert:

“loss allowance has the same meaning as in NZ IFRS 9”

(4) After the definition of “NZ IFRS 7”, insert:

“NZ IFRS 9 means New Zealand Equivalent to International Financial Reporting Standard 9 (Financial Instruments), approved under the Financial Reporting Act 2013”

5. Clause 3 of Schedule 7 amended

In clause 3(1) of Schedule 7 replace “past due and not impaired” with “past due and are not individually impaired assets”.

6. Clause 4 of Schedule 7 amended

In clause 4 of Schedule 7 replace “Information” with “If the registered bank assesses credit impairment allowances in accordance with NZ IAS 39, information”.

7. Clause 5 of Schedule 7 amended

In clause 5(1) of Schedule 7 replace “Information” with “If the registered bank assesses credit impairment allowances in accordance with NZ IAS 39, information”.

8. Clause 6 of Schedule 7 amended

In clause 6(1) of Schedule 7 replace “Information” with “If the registered bank assesses credit impairment allowances in accordance with NZ IAS 39, information”.

9. New clauses in Schedule 7

After clause 6 of Schedule 7 insert:

“6A Movements in components of loss allowance (NZ IFRS 9)

(1) In the half year disclosure statement, if the registered bank measures loss allowances for financial instruments in accordance with NZ IFRS 9, a reconciliation from the opening balance to the closing balance of the loss allowance as if paragraph 35H of NZ IFRS 7 applied.

(2) When disclosing the information specified in subclause (1), and when disclosing the information required by paragraph 35H of NZ IFRS 7 for the full year disclosure statement, the registered bank must include the items in subclause (3) in respect of the loss allowance, to the extent not otherwise disclosed to comply with NZ IFRS 7.

(3) The items referred to in subclause (2) are:

(a) the opening balance;

(b) the charge (credit) to the statement of financial performance for an increase or decrease in individual loss allowances;

(c) amounts written off;

(d) recoveries of amounts written off in previous periods;

(e) reversals of previously recognised impairment losses;

(f) other movements, and the nature of those other movements; and

(g) the closing balance.

6B Impacts of changes in gross financial assets on loss allowances (NZ IFRS 9)

(1) In the half year disclosure statement, if the registered bank measures loss allowances for financial instruments in accordance with NZ IFRS 9, an explanation of how changes in the gross carrying amounts of financial instruments contributed to changes in loss allowances, as if paragraph 35I of NZ IFRS 7 applied.

(2) When disclosing the information specified in subclause (1), and when disclosing the information required by paragraph 35I of NZ IFRS 7 for the full year disclosure statement, the registered bank must include the items in subclause (3) in respect of gross asset balances, to the extent not otherwise disclosed to comply with NZ IFRS 7.

(3) The items referred to in subclause (2) are:

(a) the pre-allowance opening balance;

(b) additions;

(c) amount written off;

(d) deletions;

(e) the pre-allowance closing balance; and

(f) the loss allowance at the reporting date.”

10. Clause 2 of Schedule 8 amended

Replace clause 2(1) of Schedule 8 with:

“(1) If the registered bank assesses credit impairment allowances in accordance with NZ IAS 39, the information in subclause (2) in respect of the registered bank’s banking group.”

11. New Clause 2A in Schedule 8

After clause 2 of Schedule 8 insert:

“2A End-period balances (NZ IFRS 9)

(1) If the registered bank measures loss allowances for financial instruments in accordance with NZ IFRS 9, the information in subclause (2) in respect of the registered bank’s banking group.

(2) The following information as at the reporting date:

(a) the aggregate amount of individually impaired assets that has been recognised, before deducting loss allowances;

(b) the amount of loss allowances that are:

(i) measured at 12-month expected credit losses;

(ii) measured at lifetime expected credit losses, showing separately allowances associated with:

(A) financial instruments that are not credit-impaired financial assets;

(B) financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired);

(C) trade receivables, contract assets or lease receivables for which the loss allowances are measured under NZ IFRS 9;

(iii) associated with financial assets that are purchased or originated credit-impaired.

(c) the aggregate amount of assets that are at least 90 days past due but are not individually impaired assets.”

12. Clause 3 of Schedule 8 amended

Replace clause 3(1) of Schedule 8 with:

“(1) If the registered bank assesses credit impairment allowances in accordance with NZ IAS 39, the information in subclause (2) in respect of the registered bank’s banking group.”

13. New Clause 3A in Schedule 8

After clause 3 of Schedule 8 insert:

“3A Charges to the statement of financial performance (NZ IFRS 9)

(1) If the registered bank measures loss allowances for financial instruments in accordance with NZ IFRS 9, the information in subclause (2) in respect of the registered bank’s banking group.

(2) The following information for the off quarter reporting period:

(a) the charge (credit) to the statement of financial performance associated with an increase or decrease in loss allowances measured at 12-month expected credit losses;

(b) the charge (credit) to the statement of financial performance associated with an increase or decrease in loss allowances measured at lifetime expected credit losses, showing separately the charge (credit) associated with:

(i) financial instruments that are not credit-impaired financial assets;

(ii) financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired);

(iii) trade receivables, contract assets or lease receivables for which the loss allowances are measured under NZ IFRS 9;

(c) the charge (credit) to the statement of financial performance associated with financial assets that are purchased or originated credit-impaired.”

14. Clause 8 of Schedule 14 replaced

Replace clause 8 of Schedule 14 with:

“8 Aggregate amount of individual credit impairment allowances against credit exposures to connected persons

If the registered bank assesses credit impairment allowances in accordance with NZ IAS 39, a statement of the aggregate amount of the registered bank’s banking group’s individual credit impairment allowances provided against credit exposures to connected persons as at the reporting date.”

15. New Clause 8A in Schedule 14

After clause 8 of Schedule 14 insert:

“8A Loss allowance for credit-impaired credit exposures to connected persons (NZ IFRS 9)

If the registered bank measures loss allowances for financial instruments in accordance with NZ IFRS 9, a statement of the aggregate amount of the registered bank’s banking group’s loss allowance for credit exposures to connected persons that are credit-impaired at the reporting date.”

16. Clause 6 of Schedule 17 amended

In clause 6(1) of Schedule 17, after “paragraph 21” insert “, and paragraphs 35F and 35G (if applicable)”.

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M. L. C. WEBSTER, Clerk of the Executive Council.

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Explanatory note

This note is not part of the order, but is intended to indicate its general effect.

This order comes into force on 31 March 2015. It amends the Registered Bank Disclosure Statements (New Zealand Incorporated Registered Banks) Order 2014, published in a Supplement to the New Zealand Gazette, 21 February 2014, No. 21, page 452. The purpose of this order is to update disclosure requirements for registered banks that are incorporated in New Zealand, to reflect the revised approach to financial asset impairment that the External Reporting Board has implemented by issuing a new version of the financial reporting standard NZ IFRS 9.

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This order is administered by the Reserve Bank of New Zealand