The Rt Hon Dame PATSY REDDY, gnzm, qso, Governor-General

Order in Council

At Wellington this 19th day of February 2018

Present:

Her Excellency the Governor General Presiding in Council

Pursuant to section 81 of the Reserve Bank of New Zealand Act 1989, Her 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 (Overseas Incorporated Registered Banks) Order 2014 Amendment Order 2018.

2. Commencement

This order comes into force on 31 March 2018.

3. Principal order amended

This order amends the Registered Bank Disclosure Statements (Overseas Incorporated Registered Banks) Order 2014, as published in the New Zealand Gazette, 21 February 2014, No. 21, page 542.

4. Interpretation

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

(2) After the definition of “Capital Adequacy Framework (Standardised Approach) (BS2A)” insert:

“Capital Adequacy Framework (Internal Models Based Approach) (BS2B) means the Reserve Bank document entitled “Capital Adequacy Framework (Internal Models Based Approach) (BS2B)” ”

(3) Replace the definition of “fair value” with:

“fair value has the same meaning as in NZ IFRS 13”

(4) After the definition of “NZ IFRS 9” insert:

“NZ IFRS 13 means New Zealand Equivalent to International Financial Reporting Standard 13 (Fair Value Measurement), approved under the Financial Reporting Act 2013”

(5) After the definition of “responsible person” insert:

“signing date means the date recorded on the disclosure statement in order to comply with section 82, being the date of the last signature on the statement”

5. Clause 5 amended

(1) In subclause 5(3)(b), replace “subclause (8)” with “subclause (4)”.

(2) Repeal subclauses 5(4), 5(5), 5(6) and 5(7).

(3) Replace subclause 5(8) with:

“(4) If subclause (1)(b) applies, the Reserve Bank may, after consultation with the registered bank, determine the length of the half year accounting period in the longer or shorter full year accounting period.”

6. Clause 6 amended

(1) Replace clause 6 with:

“(1) A disclosure statement may be—

(a) a full year disclosure statement;

(b) a half year disclosure statement; or

(c) a first disclosure statement.

(2) Subject to subclause (4), a registered bank must produce—

(a) a full year disclosure statement for each full year accounting period; and

(b) a half year disclosure statement for each half year accounting period.

(3) When registered as a registered bank, a registered bank must produce a first disclosure statement.

(4) If a full year disclosure statement and a half year disclosure statement are required in respect of the same accounting period, the registered bank is only required to produce the full year disclosure statement.

(5) Further details are set out—

(a) for full year and half year disclosure statements in Part 2 and in the Schedules of this Order; and

(b) for first disclosure statements in clause 13.”

7. Clause 10 amended

(1) Insert “and” after subclause 10(1)(a).

(2) In subclause 10(1)(b)(ii) replace “disclosure statement; and” with “disclosure statement.”.

(3) Repeal subclause 10(1)(c).

8. Clause 12 amended

(1) In subclause 12(3)(b), after “subsequent half year” delete “or off quarter”.

(2) In subclause 12(5)(b), after “subsequent half year” delete “or off quarter”.

9. Clause 18 replaced

Replace clause 18 with:

“18 Disclosure statement not to contain offer of financial products

A disclosure statement must not contain any offer of financial products within the meaning of the Financial Markets Conduct Act 2013”

10. Clause 24 repealed

Repeal clause 24.

11. Clause 25 amended

Replace subclause 25(2) with:

“(2) The financial statements referred to in subclause (1) must be prepared in accordance with the requirements of the Financial Markets Conduct Act 2013 as if every reference in that Act to a group were a reference to the registered bank’s banking group.”

12. Clause 26 amended

(1) Replace the title of clause 26 with “Financial statements for half year accounting period”.

(2) Replace subclause 26(1) with:

“(1) A half year disclosure statement of a registered bank must include or be accompanied by interim financial statements of the registered bank’s banking group prepared in accordance with NZ IAS 34.”

(3) Repeal subclause 26(2).

(4) Renumber subclause 26(3) as subclause 26(2).

13. Clause 2 of Schedule 1 amended

Replace subclause 2(1)(j) of Schedule 1 with:

“(j) for the information relating to credit and market risk exposures and capital adequacy that is required to be disclosed under Schedule 9—

(i) that the information has been examined by the auditor;

(ii) whether or not anything has come to the auditor’s attention which would cause the auditor to believe that the information is not in all material respects disclosed in accordance with Schedule 9.”

14. Clause 3 of Schedule 1 amended

In subclause 3(c)(ii) of Schedule 1 delete “prepared in accordance with Capital Adequacy Framework (Standardised Approach) (BS2A) and”.

15. Clause 7 of Schedule 2 amended

(1) Replace subclause 7(4)(b) of Schedule 2 with:

“(b) the rating applying on the signing date, and all qualifications to that rating;”

(2) In subclause 7(4)(c) of Schedule 2 replace “balance” with “signing”.

16. Clause 9 of Schedule 2 amended

(1) Replace subclause 9(5)(b) of Schedule 2 with:

“(b) the rating applying on the signing date, and all qualifications to that rating;”

(2) In subclause 9(5)(c) of Schedule 2 replace “balance” with “signing”.

17. Clause 16 of Schedule 2 amended

(1) Replace subclause 16(c) of Schedule 2 with:

“(c) the rating applying on the signing date, and all qualifications to that rating;”

(2) In subclause 16(d) of Schedule 2 replace “balance” with “signing”.

18. Title of Schedule 3 amended

In the title of Schedule 3, delete “and off quarter”.

19. Clause 6 of Schedule 3 amended

Replace subclause 6(3)(b) of Schedule 3 with:

“(b) the rating applying on the signing date, and all qualifications to that rating.”

20. Clause 9 of Schedule 3 amended

In subclause 9(2) of Schedule 3 delete “or off quarter”.

21. Clause 11 of Schedule 3 amended

In subclause 11(2) of Schedule 3 delete “or the off quarter accounting period as applicable”.

22. Clause 12 of Schedule 3 amended

Replace subclause 12(c) of Schedule 3 with:

“(c) the rating applying on the signing date, and all qualifications to that rating.”

23. Clause 14 of Schedule 3 amended

(1) In subclause 14(1)(b) of Schedule 3 delete “or the off quarter accounting period as applicable”.

(2) In subclause 14(2) of Schedule 3 delete “or the off quarter accounting period as applicable”.

(3) In subclause 14(3) of Schedule 3 delete “or the off quarter accounting period as applicable”

24. Clause 16 of Schedule 3 amended

(1) Replace subclause 16(1) of Schedule 3 with:

“A copy of the auditor’s report or review statement referred to in clause 21(2) of Part 2.”

(2) Repeal subclause 16(2) of Schedule 3.

25. Clause 4 of Schedule 4 amended

(1) Repeal subclause 4(1) of Schedule 4.

(2) Replace subclause 4(2) of Schedule 4 with:

“In disclosing the maturity analyses of financial liabilities required by paragraphs 39(a) and (b) of NZ IFRS 7, the registered bank must include an “on demand” time band.”

26. Clause 6 of Schedule 5 amended

(1) Repeal subclause 6(2) of Schedule 5.

(2) In subclause 6(3) of Schedule 5 replace “subclauses (1) and (2)” with “subclause (1)” and delete “assets and”.

(3) Renumber subclauses 6(3) and 6(4) of Schedule 5 as subclauses 6(2) and 6(3).

27. Schedule 6 repealed

Repeal Schedule 6.

28. Schedule 8 repealed

Repeal Schedule 8.

29. Clause 1 of Schedule 9 amended

(1) In subclause 1(1) of Schedule 9 replace “The information” with “If the condition in subclause (7) is not met, the information”.

(2) After subclause 1(3) of Schedule 9 insert:

“(4) If the condition in subclause (7) is met, the information in subclause (5)—

(a) in respect of the registered bank’s banking group; and

(b) in respect of total exposures secured by residential mortgages, categorised by the loan-to-valuation ratio for each exposure calculated in accordance with Capital Adequacy Framework (Internal Models Based Approach) (BS2B).

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

(6) For the purpose of the disclosure required by subclause (5)—

(a) exposure amounts for which no loan-to-valuation ratio is available must be included in the category for loan-to-valuation ratios that exceed 90%;

(b) in calculating the total exposure amount in relation to any residential mortgage loan, the registered bank must include the credit equivalent amount of any off-balance sheet exposures derived in accordance with Capital Adequacy Framework (Internal Models Based Approach) (BS2B) (except that, when incorporating any off-balance sheet exposures in the loan value, the registered bank may apply a credit conversion factor of 100% rather than using its own EAD estimates); and

(c) the valuation used in the calculation of each loan-to-valuation ratio must be the valuation of the associated residential property at the date of origination of the loan.

(7) The condition referred to in subclauses (1) and (4) is that the registered bank’s banking group includes a New Zealand incorporated registered bank that has been fully accredited by the Reserve Bank to use the internal models based approach to capital adequacy and is subject to a condition of registration requiring capital adequacy to be measured primarily in accordance with Capital Adequacy Framework (Internal Models Based Approach) (BS2B).”

30. Clause 3 of Schedule 9 amended

In clause 3(1) of Schedule 9 replace “In the full year and half year disclosure statement, the” with “The”.

31. Schedule 10 repealed

Repeal Schedule 10.

32. Title of Schedule 12 amended

In the title of Schedule 12, delete “and off quarters”.

33. Title of Schedule 14 amended

In the title of Schedule 14, delete “and off quarter”.

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MICHAEL WEBSTER, Clerk of the Executive Council.

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 2018. It amends the Registered Bank Disclosure Statements (Overseas Incorporated Registered Banks) Order 2014, published in a Supplement to the New Zealand Gazette, 21 February 2014, No. 21, page 542. The purpose of this order is to update disclosure requirements for branches of overseas-incorporated registered banks. It removes the requirements for an overseas branch to publish off-quarter disclosure statements, and to disclose information on individual large credit exposures. The order also makes a few minor changes to other required disclosure, and removes or updates some expired cross-references.

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This order is administered by the Reserve Bank of New Zealand