Order 2007
ANAND SATYANAND, Governor-General
ORDER IN COUNCIL
At Wellington this 19th day of February 2007
Present:
HIS EXCELLENCY THE GOVERNOR-GENERAL IN COUNCIL
Pursuant to section 81(1) of the Reserve Bank of New Zealand Act 1989, His Excellency the Governor-General, acting by and with the advice and 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, hereby makes the following Order.
A n a l y s i s
1. Title, Application and Commencement
Part I—Preliminary
2. Interpretation
3. Form, Frequency and Distribution of Short Form Disclosure Statement
4. General Provisions Relating to Content of Short Form Disclosure Statement
Part II—Key Information Summary
5. Content of Key Information Summary
Part III—General Disclosures to be Contained in General Short Form Disclosure Statement
6. General Matters
7. Guarantee Arrangements
8. Conditions of Registration
9. Credit Ratings
Part IV—Financial and Supplementary Disclosures to be Contained in General Short Form Disclosure Statement
10. Content of Financial and Supplementary Disclosures
10A. Insurance Business
10B. Non-Consolidated Activities
11. Auditor’s Report
12. The Directors” and the New Zealand Chief Executive Officer’s Statement
13. Financial Statements of the Overseas Bank and Overseas Banking Group
Part V—Supplemental Disclosure Statement
14. General Matters
15. Guarantors
16. Conditions of Registration
17. Financial Statements of the Overseas Bank and Overseas Banking Group
18. Financial Statements of Insurance Business and Non-Financial Activities
Schedules
1. Short Form Financial Statements
2. The Size and Nature of Business of the Banking Group
3. Capital Adequacy of the Overseas Bank and Overseas Banking Group
4. Asset Quality
5. Concentration of Credit Exposures to Individual Counterparties
6. Risk Management Policies
7. Exposures to Market Risk
8. Measurement of Market Risk Exposure
O r d e r
1. Title, Application and Commencement—(1) This Order may be cited as the Registered Bank Disclosure Statement (Off–Quarter—Overseas Incorporated Registered Banks) Order 2007.
(2) This Order applies to every Registered Bank incorporated overseas.
(3) This Order shall come into force on 30 March 2007 and replaces the Registered Bank Disclosure Statement
(Off–Quarter—New Zealand Incorporated Registered Banks) Order 2005 which is hereby consequentially revoked.
(4) The first Short Form Disclosure Statement required by this Order in respect of a Registered Bank shall be in respect of the first Off-Quarter Balance Date which occurs after 30 March 2007.
Part I
Preliminary
2. Interpretation—(1) Any term or expression used in this Order that is not defined in this Order:
(a) which is defined in the Act shall, unless the context otherwise requires, have the meaning given to it by the Act;
(b) which is not defined in the Act and which is defined in the Conditions of Registration shall, unless the context otherwise requires, have the meaning given to it by the Conditions of Registration; and
(c) which is not defined in the Act or in the Conditions of Registration shall, unless the context otherwise requires, be interpreted in compliance with generally accepted accounting practice (as that term is defined in section 3 of the Financial Reporting Act 1993).
(2) References in this Order to the singular include the plural and vice versa.
(3) In this Order a reference to an “FRS” is a reference to a Financial Reporting Standard approved, or given authoritative support from time to time, by the Accounting Standards Review Board pursuant to the Financial Reporting Act 1993.
(4) In this Order, unless the context otherwise requires:
“Accounting Period” has the meaning set out in the Companies Act 1993.
“Act” means the Reserve Bank of New Zealand Act 1989.
“Address for Service” in relation to:
(a) an individual, means the address of their usual place of business in New Zealand or, if no such address exists, the address of their usual place of business outside New Zealand;
(b) a company within the meaning of section 2(1) of the Companies Act 1993, means the address for service adopted by the company under section 192 of that Act;
(c) any other entity, means the address of its principal office or principal place of business in New Zealand or,
if no such address exists, its principal office or principal place of business outside New Zealand.
“Aggregate Equity Exposure” means the aggregate amount of Equity Exposure to all currencies.
“Aggregate Foreign Currency Exposure” means the aggregate amount of Foreign Currency Exposure to all currencies other than New Zealand dollars.
“Aggregate Interest Rate Exposure” means the aggregate amount of Interest Rate Exposure to all currencies.
“Aggregate Market Risk Exposure” means exposure to all, or any, of Aggregate Equity Exposure, Aggregate Foreign Currency Exposure and Aggregate Interest Rate Exposure.
“Applicable Financial Reporting Standard” has the same meaning as in section 2 of the Financial Reporting Act 1993.
“Approved Financial Reporting Standard” has the same meaning as in section 2 of the Financial Reporting Act 1993.
“Asset Acquired Through the Enforcement of Security” has the same meaning as in FRS-33, as amended from time to time.
“Balance Date” means the last day of an Accounting Period.
“Bank” means a Registered Bank or an Overseas Bank.
“Banking Group” means the Financial Reporting Group but where the Reserve Bank has, by notice in writing to the Registered Bank, after consultation with the Registered Bank, agreed to or required the inclusion or exclusion of any entity or any part of any entity, means the Financial Reporting Group including or excluding that entity or that part of that entity, as the case may be.
“Capital” in relation to an Overseas Bank or Overseas Banking Group, means the amount of capital held by the Overseas Bank or Overseas Banking Group, determined in accordance with the requirements of the authority having the power to impose minimum capital requirements on that Overseas Bank or Overseas Banking Group in its country of domicile.
“Commodity Instrument” has the same meaning as in FRS-33, as amended from time to time.
“Company” has the same meaning as in section 2 of the Companies Act 1993, and includes an overseas company within the meaning of section 2 of the Companies Act 1993.
“Conditions of Registration” in relation to a Registered Bank means the current conditions of registration imposed on that Registered Bank by the Reserve Bank pursuant to section 74 of the Act.
“Counterparty” has the same meaning as in FRS-33, as amended from time to time.
“Credit Exposure” means the amount of the maximum loss that a party to a contract could incur as a result of the Counterparty to that contract failing to discharge its obligations, without taking into account the value of collateral, guarantees, indemnities, other support arrangements, and any potential recoveries, where the maximum loss in relation to:
(a) a market related contract means the credit equivalent amount of the contract determined in accordance with the Reserve Bank document entitled Capital Adequacy Framework (BS2) as amended from time to time;
(b) any other contract means the full value of the contract;
provided that, for the purposes of this definition, a Financial Liability and a Financial Asset may be offset if to do so would accord with generally accepted accounting practice as defined in the Financial Reporting Act 1993.
“Credit Risk” has the same meaning as in FRS-33, as amended from time to time.
“Currency Risk” has the same meaning as in FRS-33, as amended from time to time.
“Debt Security”, in relation to a Registered Bank, means any interest in or right to be paid money that is, or is to be, deposited with, lent to, or otherwise owing by, that Registered Bank (whether or not the interest or right is secured by a charge over any property).
“Director” means a person occupying the position of director of the Overseas Bank by whatever name called who whether by himself or herself, or in conjunction with other directors acting as a board of directors, has the powers necessary for managing, and for directing and supervising the management of, the business and affairs of the Overseas Bank.
“Direct Banking Account” means a bank account held at a branch that is not normally physically accessible by the customers of that branch.
“Disclosure Statement”, in relation to a Registered Bank, means a document Published by that Registered Bank in terms of the Registered Bank Disclosure Statement (Full and Half-Year - Overseas Incorporated Registered Banks) Order 2007.
“Equity” has the same meaning as in the Institute of Chartered Accountants of New Zealand Statement of Concepts for General Purpose Financial Reporting as amended from time to time.
“Equity Exposure” means the amount of the change in the economic value of equity instruments that are Financial Assets and Financial Liabilities of the Banking Group in a single currency, which would occur as a result of a change in the price of equity instruments in that currency.
“Equity Risk” means the risk arising from changes in the prices of equity instruments.
“Fair Value” has the same meaning as in FRS-33, as amended from time to time.
“Financial Asset” has the same meaning as in FRS-33, as amended from time to time.
“Financial Instrument” has the same meaning as in FRS-33, as amended from time to time.
“Financial Liability” has the same meaning as in FRS-33, as amended from time to time.
“Financial Reporting Group” means the New Zealand Business of all the members of the group (as that term is defined in section 2(1) of the Financial Reporting Act 1993) that comprises a reporting entity that is the Overseas Bank and its subsidiaries, prepared as if the members of the group were companies formed and registered in New Zealand.
“First Quarter Accounting Period” means, subject to the application of subclause 2(6), the first three month period of an Accounting Period.
“Foreign Currency Exposure” means the amount of the change in the economic value of the Financial Assets and Financial Liabilities of the Banking Group in a single foreign currency which would occur as a result of a change in the rate of exchange applicable to that foreign currency.
“General Provision” has the same meaning as in FRS-33, as amended from time to time.
“General Short Form Disclosure Statement” means that part of a Short Form Disclosure Statement which contains the information prescribed in Part III and Part IV of this Order.
“Group of Closely Related Counterparties” has the same meaning as in FRS-33, as amended from time to time.
“Immediate Relative”, in relation to any person, means their spouse, civil union partner, or de facto partner (as defined in the Property (Relationships) Act 1976), and any parent, brother, sister or child, in each case whether or not adoptive,
of that person or of their spouse, civil union partner, or de facto partner.
“Impaired Asset” means a Non-Accrual Asset, a Restructured Asset, or an Asset Acquired Through the Enforcement of Security.
“Independent Director” means a Director who is not an employee of the Overseas Bank, and who is not a director, trustee, or employee of any holding company of the Overseas Bank, or any other entity capable of controlling or significantly influencing the Overseas Bank.
“Insurance Business” has the same meaning as in the Conditions of Registration.
“Interest Rate Exposure” means the amount of the change in the economic value of the Financial Assets (excluding equity instruments) and Financial Liabilities (excluding equity instruments) of the Banking Group in a single currency which would occur as a result of a change in interest rates in that currency.
“Interest Rate Repricing Date”, as that term applies to a Financial Instrument or to a proportion of a Financial Instrument, means the earlier of the date on which, in accordance with the terms of the Financial Instrument:
(a) the interest rate reset date next occurs (being the date on which the rate of interest payable in respect of the Financial Instrument can or will alter); or
(b) the principal sum is due and payable or, where no principal sum is due and payable, the maturity date occurs.
“Interest Rate Risk” has the same meaning as in FRS-33, as amended from time to time.
“Investment Security” has the same meaning as in FRS-33, as amended from time to time.
“Issuer” has the same meaning as in the Financial Reporting Act 1993.
“Key Information Summary” means that part of a Short Form Disclosure Statement which contains the information prescribed in Part II of this Order.
“Market Risk Exposure” means exposure to any, or all, of Equity Exposure, Foreign Currency Exposure and Interest Rate Exposure.
“Material” has the meaning given to it by generally accepted accounting practice, or, where generally accepted accounting practice does not apply, means a statement, fact, or item which is of such a nature or amount that its inclusion or omission, or the method of treating its disclosure, would be likely to influence a reasonable user of the Short Form Disclosure Statement.
“New Zealand Business” means all business, operations, or undertakings conducted in or from New Zealand.
“New Zealand Chief Executive Officer” has the same meaning as in section 2 of the Act.
“Non-Accrual Asset” means any Credit Exposure for which it is probable that the Registered Bank or a member of the Banking Group will not be able to collect all amounts owing in accordance with the terms of the contract with the Counterparty.
“NZ IAS” means a New Zealand International Accounting Standard approved by the Accounting Standards Review Board as an Approved Financial Reporting Standard.
“NZ IFRS” means a New Zealand International Financial Reporting Standard approved by the Accounting Standards Review Board as an Approved Financial Reporting Standard.
“OECD Government” means the central government of any of the countries specified in the list of OECD countries contained in Appendix One to the Reserve Bank document entitled Capital Adequacy Framework (BS2), as amended from time to time.
“Off Quarter Balance Date” means the last day of a First Quarter Accounting Period or Third Quarter Accounting Period.
“Other Asset Acquired Through the Enforcement of Security” has the same meaning as in FRS-33, as amended from time to time.
“Other Asset Under Administration” means any Credit Exposure which is not an Impaired Asset or a Past Due Asset, but which is to a Counterparty:
(a) who is in receivership, liquidation, bankruptcy, statutory management or any form of administration in
New Zealand; or
(b) who is in any other equivalent form of voluntary or involuntary administration in an overseas jurisdiction.
“Other Security” has the same meaning as in FRS-33, as amended from time to time.
“Overseas Bank” means a financial institution incorporated outside New Zealand which has been authorised, registered, or licensed as a bank in its country of domicile by the appropriate banking supervisory authority and, unless the context otherwise requires, is the bank of which the Registered Bank is the New Zealand branch.
“Overseas Banking Group” means an Overseas Bank and all other entities included in the group for the purposes of public reporting of group financial statements in the country of domicile of the Overseas Bank.
“Past Due Asset” means any Credit Exposure which has not been operated by the Counterparty within its key terms for at least 90 days and which is not an Impaired Asset, and for the sake of clarity, includes an asset for which, in relation to the contracted terms, conditions, or limits which applied to the asset immediately before non-performance commenced:
(a) any payment of principal, interest, or other forms of monies owing is overdue, or has not been paid in accordance with the asset’s terms and conditions, for at least 90 days; or
(b) amounts owing under revolving facilities have been continuously outside of limits for at least 90 days.
“Premises” means any staffed premises of the Registered Bank or an agency of the Registered Bank to which the Registered Bank’s customers or potential customers have access in order to conduct banking business.
“Publication Date”, in respect of a Short Form Disclosure Statement, means the date the Short Form Disclosure Statement is Published in accordance with clause 3 of this Order.
“Publish” includes distribute, make available and disseminate.
“Rate Insensitive Retail Assets” means that amount of the Financial Assets held by the Banking Group which the Registered Bank reasonably believes is unlikely to be diminished or increased as a result of a Material change in market interest rates if the interest rate applicable to that Financial Asset (which may be zero) does not change or does not change Materially.
“Rate Insensitive Retail Liabilities” means that amount of the Financial Liabilities held by the Banking Group which the Registered Bank reasonably believes is unlikely to be diminished or increased as a result of a Material change in market interest rates if the interest rate applicable to that Financial Liability (which may be zero) does not change or does not change Materially.
“Rate Insensitive Retail Product” means either or both of a Rate Insensitive Retail Asset or a Rate Insensitive Retail Liability.
“Real Estate Asset Acquired Through the Enforcement of Security” has the same meaning as in FRS-33, as amended from time to time.
“Register” means the register of Registered Banks maintained pursuant to section 69 of the Act.
“Registered Bank” means the New Zealand Business of the entity which is entered on the Register, as if that entity’s business were conducted by a company formed and registered in New Zealand.
“Responsible Person” means a person authorised in writing by a Director or the New Zealand Chief Executive Officer to sign the Short Form Disclosure Statement in accordance with section 82 of the Act.
“Restructured Asset” means any Credit Exposure which is not a Non-Accrual Asset and for which:
(a) the original terms have been changed to grant the Counterparty a concession that would not otherwise have been available, due to the Counterparty’s difficulties in complying with the original terms;
(b) the revised terms of the facility are not comparable with the terms of new facilities with comparable risks; and
(c) the yield on the asset following restructuring is equal to, or greater than, the average cost of funds of the Registered Bank or a member of the Banking Group, or that a loss is not otherwise expected to be incurred.
“Retail Deposit” has the same meaning as in the Conditions of Registration.
“Short Form Disclosure Statement”, in relation to a Registered Bank, means a document Published by that Registered Bank under sections 81 or 83 of the Act which shall comprise a General Short Form Disclosure Statement,
Key Information Summary and Supplemental Disclosure Statement.
“Specific Provision” has the same meaning as in FRS-33, as amended from time to time.
“Subsidiary” means a subsidiary within the meaning of sections 5 to 8 of the Companies Act 1993.
“Supplemental Disclosure Statement” means that part of a Short Form Disclosure Statement which contains the information prescribed in Part V of this Order.
“Third Quarter Accounting Period” means, subject to the application of subclause 2(6):
(a) the first nine month period of an Accounting Period; and
(b) where an Accounting Period will be 15 months, the first 12 month period of an Accounting Period.
“Tier One Capital” in relation to an Overseas Bank or Overseas Banking Group, means the amount of tier one capital held by the Overseas Bank or Overseas Banking Group determined in accordance with the requirements of the authority having the power to impose minimum Capital requirements on that Overseas Bank or Overseas Banking Group in its country of domicile.
“Ultimate Holding Company” means the body corporate which is the Registered Bank’s holding company (as that term is defined in section 5 of the Companies Act 1993) and which is not itself a Subsidiary of another body corporate and which is not a Bank.
“Ultimate Parent Bank” means any Bank which is the Registered Bank’s holding company (as that term is defined in section 5 of the Companies Act 1993) and which is not itself a Subsidiary of another Bank.
“Working Day” means a day of the week on which the Registered Bank’s head office is open for business.
(5) Where a Registered Bank has adopted NZ IASs and NZ IFRSs:
(aa) “Allowance for impairment loss” means an amount which has been created against identified credit losses or in respect of an identified deterioration in the value of any asset or class of asset attributable to an increase in credit risk as set out in NZ IAS 39 paragraphs 58 to 62;
(a) Specific Provision is deemed to refer to and have the same meaning as an “Allowance for impairment loss” which has been allocated to an individual financial asset;
(b) General Provision is deemed to refer to and have the same meaning as an “Allowance for impairment loss” which has been allocated to groups of financial assets;
(c) Group of Closely Related Counterparties is deemed to refer to and have the same meaning as “Group of closely related counterparties”, as defined in NZ IAS 30 or NZ IFRS 7, as applicable;
(d) Equity refers to and has the same meaning as “Equity” in the “New Zealand Equivalent to the IASB Framework for the Preparation and Presentation of Financial Statements” approved by the Accounting Standards Review Board as amended from time to time;
(e) Asset Acquired Through the Enforcement of Security means any asset which is legally owned as the result of enforcing security, other than a building occupied by the bank;
(f) Real Estate Asset Acquired Through the Enforcement of Security means a land or building asset acquired through the enforcement of security;
(g) Non-Accrual Asset and Restructured Asset are deemed to refer to an “Other individually impaired asset” and a “Restructured asset” respectively, which shall be defined as follows:
(i) “Other individually impaired asset” means any Credit Exposure that is individually determined to be impaired at reporting date in accordance with NZ IAS 39 paragraphs 58 to 62 but is not a Restructured asset or an Asset Acquired Through the Enforcement of Security;
(ii) “Restructured asset” means any Credit Exposure for which:
(A) the original terms have been changed to grant the Counterparty a concession that would not have otherwise been available, due to the Counterparty’s difficulties in complying with the original terms;
(B) the revised terms of the facility are not comparable with the terms of new facilities with comparable risks; and
(C) the yield on the asset following restructuring is equal to, or greater than, the institution’s average cost
of funds, or that a loss is not otherwise expected to be incurred;
where, in this subclause 2(5)(g), the term Credit Exposure shall have the same meaning as in subclause 2(4) of Part I of this Order;
(h) Impaired Asset is deemed to mean an “Other individually impaired asset”, a “Restructured asset”, or an “Asset acquired through the enforcement of security”;
(i) Any other definition contained in FRS-33, except for the definition of Counterparty, is deemed to refer to and have the meaning of:
(i) the corresponding definition, meaning, interpretation or guidance contained in NZ IAS 30 or NZ IFRS 7, as applicable;
(ii) or where NZ IAS 30 or NZ IFRS 7 is not applicable, the corresponding definition, meaning, interpretation or guidance contained in any other NZ IAS or NZ IFRS.
(6) Notwithstanding any other provisions of this Order, if as a result of the date of registration of a Company in terms of the Companies Act 1993, or as a result of a change in the Balance Date of a Registered Bank or Company, an Accounting Period of a Registered Bank will be shorter or longer than 12 months, the Reserve Bank may, after consultation with the Company or the Registered Bank, determine the length of any First or Third Quarter Accounting Period relating to the shorter or longer Accounting Period.
3. Form, Frequency and Distribution of Short Form Disclosure Statement—(1) Subject to the Act, every Registered Bank shall Publish, after each Off-Quarter Balance Date, a Short Form Disclosure Statement which shall:
(a) contain the information that is prescribed in Part II to Part V of this Order; and
(b) comply with the Act.
(2) The Short Form Disclosure Statement shall be Published:
(a) not later than two months after each Off-Quarter Balance Date;
(b) where a General Short Form Disclosure Statement is subject to review or audit by an external auditor, and provided that the extent of review or audit is not less than that which is required in respect of a Disclosure Statement in terms of the Registered Bank Disclosure Statement (Full and Half-Year - Overseas Incorporated Registered Banks) Order 2007, not later than three months after each Off-Quarter Balance Date.

(3) Short Form Disclosure Statements shall be Published in the following manner:
(a) every Registered Bank shall prominently display the Registered Bank’s most recent Key Information Summary
at the Registered Bank’s head office, every branch of the Registered Bank, every other Premises of the Registered Bank, and every Premises of an agency of the Registered Bank primarily engaged in the business of the
Registered Bank;
(b) every Registered Bank shall provide to any person a copy of its most recent Key Information Summary immediately upon request and at no charge;
(c) where a Registered Bank publishes information on an internet web site which includes any information directed primarily at its New Zealand customers or potential customers, the Registered Bank shall make available or display a copy of its most recent Key Information Summary on that internet web site;
(d) every Registered Bank shall notify each of its customers holding a Direct Banking Account of the availability of its most recent Key Information Summary, as soon as is practicable after the publication of that Key Information Summary, and shall state that the Key Information Summary is available immediately upon request and at no charge;
(e) every Registered Bank shall provide a copy of its most recent General Short Form Disclosure Statement at no charge, immediately to any person requesting a copy where the request is made at the Registered Bank’s head office and within five Working Days where the request is made at any branch of the Registered Bank, any other Premises of the Registered Bank, or any Premises of an agency of the Registered Bank primarily engaged in the business of the Registered Bank;
(f) every Registered Bank shall provide a copy of its most recent Supplemental Disclosure Statement, or such part of
it as is requested, at no charge, immediately to any person requesting a copy where the request is made at
the Registered Bank’s head office and within five Working Days where the request is made at any branch of the Registered Bank, any other Premises of the Registered Bank, or any Premises of an agency of the Registered Bank primarily engaged in the business of the Registered Bank, unless the content of a Supplemental Disclosure Statement is included in the General Short Form Disclosure Statement; and
(g) every Registered Bank shall deliver a copy of its most recent Short Form Disclosure Statement to the Reserve Bank on the Publication Date.
4. General Provisions Relating to Content of Short Form Disclosure Statement—
(1) (a) In addition to the information which is required by this Order, a Short Form Disclosure Statement:
(i) shall contain such other information as in the opinion of the Directors and New Zealand Chief Executive Officer it is necessary or desirable to include so as to ensure that any information contained in the Short Form Disclosure Statement is not false or misleading in any Material particular; and
(ii) subject to any express provision to the contrary in this Order, may contain such other information as the Directors and New Zealand Chief Executive Officer consider appropriate.
(b) A Short Form Disclosure Statement shall not contain any offer (within the meaning of that term as defined in section 2 of the Securities Act 1978) of any Debt Securities, but may contain information required for the purposes of regulation 21(2) and regulation 22(d) of the Securities Regulations 1983.
(2) Subject to the Act and this clause, nothing in this Order shall limit the provisions of any other enactment.
(3) Where this Order requires or permits a Short Form Disclosure Statement to incorporate information about any person, business or group in respect of a stated period, that information need not relate to any part of that period for which the
person, business, group or any part thereof did not exist. Where the Short Form Disclosure Statement contains information in respect of a period that is less than the stated period, it shall identify the period in respect of which the information is provided.
(4) The Short Form Disclosure Statement shall not state or imply that a person is, or intends to become, a shareholder of the Overseas Bank, or of a member of the Overseas Banking Group, without also stating whether that person guarantees any of
the obligations of the Registered Bank or any member of the Banking Group.
(5) Subject to subclause (7) of this clause, where a Registered Bank is unable because of systems limitations or because of circumstances beyond its control to disclose information which the Registered Bank would, pursuant to this Order, be required to disclose, the Short Form Disclosure Statement shall:
(a) state that fact, and an explanation of the circumstances; and
(b) contain information which is the closest available alternative to that required to be disclosed pursuant to this Order.
(6) The comparative information required to be disclosed by this Order or by the requirements of the Financial Reporting Act 1993 for the previous corresponding period shall be restated so that it corresponds to the information presented for the current period. Where there has been a Material restatement of prior period amounts, the nature of, and the reason for,
the restatement shall be disclosed.
(7) A Registered Bank need not disclose comparative information where this information is not readily available, provided that comparative information shall be deemed to be readily available 12 months after the date at which such information was first required to be Published.
(8) A Registered Bank shall disclose the currency used where financial statements, or information drawn from financial statements, are disclosed in a currency other than New Zealand dollars.
(9) Other than in the case of copies of guarantee contracts, all information disclosed in accordance with this Order shall be disclosed in English.
(10) Where a Registered Bank has adopted NZ IASs and NZ IFRSs all the requirements of this Order shall apply to that Registered Bank, using, as applicable, the following principles as a basis for the interpretation of the provisions of this Order:
(a) all the terms set out in subclause 2(4) of Part I of this Order shall have the same meaning as in that subclause, unless they are modified by subclause 2(5) of this Order;
(b) any reference in this Order to the phrase “provision for expected losses” is deemed to refer to an “Allowance for impairment loss” of the type defined in subclause 2(5);
(c) any reference in this Order to the phrase “provision for diminution in asset value” is deemed to refer to
“an allowance for impairment loss created in respect of a non-financial asset”;
(d) any reference in this Order to the term “pre-provision” is deemed to refer to the term “pre-allowance”;
(e) information shall be disclosed using terminology deemed to apply by this subclause 4(10) or by subclause 2(5) of Part I of this Order, except that information relating to Specific Provisions shall be disclosed using the terminology “Allowance for impairment loss on individual assets”, and information relating to General Provisions shall be disclosed using the terminology “Allowance for impairment loss on groups of financial assets”.
Part II
Key Information Summary
5. Content of Key Information Summary—(1) Subject to subclause (2) of this clause, the Key Information Summary shall contain, in the same order and under the same headings, the information required to be disclosed pursuant to subclause (6) of this clause, as at the Registered Bank’s Off-Quarter Balance Date or for the First Quarter Accounting Period or Third Quarter Accounting Period, as the case may be, unless otherwise stated.
(2) If a Key Information Summary would be false or misleading as a result of stating the information required to be disclosed pursuant to subclause (6) of this clause, information and explanations that will make the Key Information Summary not false or misleading shall also be stated under the relevant heading.
(3) Where applicable, the information contained in the Key Information Summary shall be taken from the information contained in the General Short Form Disclosure Statement.
(4) The Key Information Summary may contain additional information, to which the information stated pursuant to subclause (6) of this clause may refer by way of note, provided that such information is set out after the information required
to be disclosed pursuant to subclause (6) of this clause.
(5) The information required to be disclosed pursuant to subclause (6)(d) to (h) of this clause shall include comparative figures for the previous corresponding period.
(6) The Key Information Summary shall contain:
(a) Introductory information—
the following statement:
“The purpose of this Key Information Summary is to provide customers and potential customers with information about the financial condition of their bank.
Neither the New Zealand Government nor the Reserve Bank of New Zealand guarantees or insures bank deposits.
The information contained in the Key Information Summary is explained in the Reserve Bank publication “Your Bank’s Disclosure Statement – What’s In It For You?” which can be obtained from the Reserve Bank.” (or at the option of the Registered Bank, “... from the Reserve Bank and the (name of bank).”);
(b) Corporate information—
(i) the name of the Overseas Bank and its country of domicile;
(ii) if applicable, the name of any person that is the Ultimate Parent Bank of the Overseas Bank and its country of domicile;
(iii) if applicable, the name of any person that is the Ultimate Holding Company of the Overseas Bank and its country of domicile;
(c) Credit rating—
if the Registered Bank is required, by a notice given to it under section 80 of the Act, to obtain or maintain a rating of its creditworthiness or financial condition by a person nominated or approved by the Reserve Bank, with respect to each rating obtained or maintained by the Registered Bank that complies with the notice given under section 80:
(i) the name of the person who gave the rating;
(ii) the type of rating;
(iii) the current rating and all qualifications to that rating;
(iv) any changes made to the rating in the two years preceding the Off-Quarter Balance Date and the date on which any such change occurred;
(d) Profitability—
(i) net profit or loss after tax and extraordinary items in respect of:
(A) the Overseas Banking Group for the most recent period for which the information is publicly available; and
(B) the Banking Group over the First Quarter Accounting Period or Third Quarter Accounting Period,
specifying the period and end date to which this information applies;
(ii) net profit or loss after tax and extraordinary items over the previous 12 month period, expressed as a percentage of the average of total assets, in respect of:
(A) the Overseas Banking Group and the ending date of the most recent period for which the information is publicly available; and
(B) the Banking Group and the Off-Quarter Balance Date of the First Quarter Accounting Period or Third Quarter Accounting Period;
(e) Size—
(i) total assets of the Overseas Banking Group as at the most recent date for which the information is publicly available and the percentage change in total assets over the 12 months ending on that date;
(ii) total assets of the Banking Group and the percentage change in total assets over the 12 months ending on the current Off-Quarter Balance Date;
(f) Capital adequacy—
the most recent publicly available information on the capital adequacy of the Overseas Bank and Overseas Banking Group, disclosing:
(i) Tier One Capital expressed as a percentage of risk weighted exposures and the minimum percentage of this ratio required by the appropriate banking supervisory authority in the Overseas Bank’s country of domicile;
(ii) Capital expressed as a percentage of risk weighted exposures and the minimum percentage of this ratio required by the appropriate banking supervisory authority in the Overseas Bank’s country of domicile;
(g) Asset quality—
(i) total Impaired Assets (before provisions and net of interest held in suspense);
(ii) total Impaired Assets expressed as a percentage of total assets;
(iii) total Specific Provisions;
(iv) total Specific Provisions expressed as a percentage of total Impaired Assets;
in respect of:
(v) the Overseas Banking Group as at the most recent date for which the information is publicly available; and
(vi) the Banking Group;
(h) Peak Credit Exposure concentrations—
for the First Quarter Accounting Period or the most recent quarter of the Third Quarter Accounting Period:
(i) the number of individual non Bank Counterparties or Groups of Closely Related Counterparties of which a Bank is not the parent; and
(ii) the number of individual Bank Counterparties or Groups of Closely Related Counterparties of which a Bank is the parent;
to which the Banking Group has a peak aggregate Credit Exposure which equals or exceeds 10% of the Overseas Banking Group’s Equity, in successive ranges of 10% of the Overseas Banking Group’s Equity.
This information shall be disclosed using the methodology set out in Schedule 5 of this Order. A Registered Bank shall state that this information excludes exposures to any OECD Government;
(i) Ranking of local creditors in a winding-up—
a statement as to whether there are any Material legislative or regulatory restrictions in the Overseas Bank’s country of incorporation which subordinate the claims of any class of unsecured creditors of the Registered Bank on the assets of the Overseas Bank to those of any other class of unsecured creditors of the Overseas Bank, in a winding up of that Overseas Bank. If so, the Key Information Summary shall also state:
(i) the name or title of the legislation or regulations involved and a summary of the nature of the subordination of the rights of creditors of the Registered Bank which they create; and
(ii) the nature and amount of each class of the Registered Bank’s liabilities which are so affected;
(ia) where the Registered Bank is required by any statute to hold in New Zealand an excess of assets over deposit liabilities, the name of the statute and, a description of the requirement and a statement as to whether, since the commencement of the Accounting Period, the Registered Bank has at all times complied with that requirement;
(ib) where the Overseas Bank is subject to any regulatory or legislative requirement in the Overseas Bank’s country of incorporation to maintain sufficient assets in that country to cover an ongoing obligation to pay deposit liabilities in that country:
(i) the name or title of the legislation or regulations which impose the requirement;
(ii) a description of the requirement;
(iii) a statement that the requirement has the potential to impact on the management of the liquidity of the
New Zealand operations of the Overseas Bank;
(ic) Non-consolidated activities—
(i) a statement as to whether the Overseas Bank conducts in New Zealand outside the Banking Group any Insurance Business or non-financial activities; and if so
(ii) the total assets, total equity, and total profits before and after tax of that business or those activities on a consolidated basis, separately for Insurance Business and for non-financial activities, as applicable, and if that business is conducted by an overseas incorporated company, separately in respect of the overseas company’s group and that group’s New Zealand Business;
(iii) a statement that the most recent publicly available financial statements and group financial statements for:
– Insurance Business conducted in New Zealand outside the Banking Group; and
– non-financial activities conducted in New Zealand outside the Banking Group;
(separately, as applicable) are contained in the Registered Bank’s Supplemental Disclosure Statement or General Short Form Disclosure Statement (state which), copies of which (or that part of which, as applicable) will be provided at no charge to any person requesting a copy in the manner described in paragraph (k) of this subclause;
(j) Financial statements of the Overseas Bank and Overseas Banking Group—
a statement that a copy of the most recent publicly available financial statements of the Overseas Bank and Overseas Banking Group are contained in the Registered Bank’s Supplemental Disclosure Statement or General Short Form Disclosure Statement (state which), copies of which (or of that part of which, as applicable) will be provided at no charge to any person requesting a copy in the manner described in paragraph (k) of this subclause; and
(k) Availability of Disclosure Statements—
a statement:
(i) that copies of the Registered Bank’s most recent General Short Form Disclosure Statement and Supplemental Disclosure Statement will be provided immediately at no charge to any person requesting a copy where the request is made at the Registered Bank’s head office;
(ii) specifying the categories of places where copies of the Registered Bank’s most recent General Short Form Disclosure Statement and Supplemental Disclosure Statement will be provided at no charge to any person within five Working Days of a request for a copy having been made.
Part III
General Disclosures to be Contained in General Short Form Disclosure Statement
6. General Matters—(1) In respect of the Registered Bank, the General Short Form Disclosure Statement shall state its name and Address for Service.
(2) In respect of the Overseas Bank, the General Short Form Disclosure Statement shall state:
(a) its name and the address of its principal office, or place of business, outside New Zealand;
(b) the statute or other authority under or pursuant to which it was incorporated or established; and
(c) the date of its incorporation or establishment.
(3) Where applicable, the General Short Form Disclosure Statement shall state:
(a) the name and Address for Service of the Ultimate Parent Bank of the Overseas Bank;
(b) the name and Address for Service of the Ultimate Holding Company of the Overseas Bank; and
(c) a summary of any regulations, legislation or other restrictions of a legally enforceable nature which may Materially inhibit the legal ability of the bodies corporate referred to in paragraphs (a) and (b) of this subclause, to provide Material financial support to the Registered Bank.
(4) The General Short Form Disclosure Statement shall state whether there are any Material legislative or regulatory restrictions in the Overseas Bank’s country of incorporation which subordinate the claims of any class of unsecured creditors of the Registered Bank on the assets of the Overseas Bank to those of any other class of unsecured creditors of the Overseas Bank, in a winding up of that Overseas Bank. If so, the General Short Form Disclosure Statement shall also state:
(a) the name or title of the legislation or regulations involved and the nature of the subordination of the rights of creditors of the Registered Bank which they create; and
(b) the nature and amount of each class of the Registered Bank’s liabilities which are so affected.
(5) Where the Registered Bank is required by any statute to hold in New Zealand an excess of assets over deposit liabilities, the General Short Form Disclosure Statement shall state the name of the statute and contain a description of the requirement and a statement as to whether, since the commencement of the Accounting Period, the Registered Bank has at all times complied with that requirement.
(6) Where the Overseas Bank is subject to any regulatory or legislative requirement in the Overseas Bank’s country of incorporation to maintain sufficient assets in that country to cover an ongoing obligation to pay deposit liabilities in that country, the General Short Form Disclosure Statement shall:
(a) state the name or title of the legislation or regulations which impose the requirement;
(b) contain a description of the requirement;
(c) state that the requirement has the potential to impact on the management of the liquidity of the New Zealand operations of the Overseas Bank.
(7) The General Short Form Disclosure Statement shall state:
(a) whether there have been any changes in the composition of the Overseas Bank’s board of Directors since the Publication Date of the previous Disclosure Statement, and if so, the changes involved, and the name of each Director affected by the changes; and if applicable
(b) the name of each Director, and if applicable, the New Zealand Chief Executive Officer, on whose behalf each Responsible Person has signed the Short Form Disclosure Statement.
7. Guarantee Arrangements—(1) The General Short Form Disclosure Statement shall state whether the Material obligations of the Overseas Bank are guaranteed.
(2) Where a person guarantees any Material obligations of the Overseas Bank, and where subclause (3) of this clause does not apply, the General Short Form Disclosure Statement shall state:
(a) the name and Address for Service of the guarantor;
(b) whether the guarantor is a member of the Banking Group or Overseas Banking Group;
(c) the nature of the obligations which are guaranteed, including a description sufficient to identify them;
(d) whether there are any limits on the amount of the obligations guaranteed and, if so, a brief summary of the nature of those limits;
(e) whether there are any Material conditions applicable to the guarantee other than non-performance by the principal obligor and, if so, a brief summary of those conditions;
(f) whether there are any Material legislative or regulatory restrictions in the guarantor’s country of incorporation which would have the effect of subordinating the claims under the guarantee of any of the creditors of the Overseas Bank on the assets of the guarantor, to other claims on the guarantor, in a winding up of that guarantor. If so, the General Short Form Disclosure Statement shall also state:
(i) the name or title of the legislation or regulations involved and the nature of the subordination of the rights of the creditors which they create;
(ii) the amount of the liabilities which are so affected;
(g) (i) the amount of the net tangible assets of the guarantor as shown in the most recent publicly available audited financial statements, together with any qualifications in the auditor’s report on those financial statements that reflect on the statement of those assets in the financial statements; or
(ii) where the guarantor is a Bank, the most recent publicly disclosed Capital of the guarantor and the guarantor group, expressed as an amount and as a percentage of risk weighted exposures, and the date to which that measure of Capital relates;
(h) whether the guarantor has a credit rating applicable to its long term senior unsecured obligations payable in the currency of the country of its incorporation, and if so, in respect to each such rating:
(i) the name of the person who gave the credit rating;
(ii) the current rating and all qualifications to that rating;
(iii) any changes made to the rating in the two years preceding the Off-Quarter Balance Date and the date on which any such change occurred;
(iv) descriptions or explanations of all steps in the applicable rating scales;
(i) (i) that a copy of the Registered Bank’s most recent Supplemental Disclosure Statement, which contains a copy of the full guarantee contract, will be provided immediately at no charge to any person requesting a copy where the request is made at the Registered Bank’s head office;
(ii) the categories of places where a copy of the Registered Bank’s most recent Supplemental Disclosure Statement, which contains a copy of the full guarantee contract, will be provided at no charge to any person within 5 Working Days of a request for a copy having been made;
unless the content of the Supplemental Disclosure Statement is contained in the General Short Form Disclosure Statement.
(3) Where a person or persons have entered into any Material cross guaranteeing arrangements with the Overseas Bank, the General Short Form Disclosure Statement shall:
(a) describe the guaranteeing group and the nature of the cross-guaranteeing arrangements;
(b) state the information required to be disclosed pursuant to clauses 7(2)(d) to (f) as if those clauses applied to the guarantees of the obligations of the Overseas Bank, as well as to the guarantees the Overseas Bank has given in respect of the first mentioned person’s or persons’ obligations;
(c) if there is a single contract which sets out the rights and obligations of all the cross guarantors; or if there is
a standard contract which is representative of the rights and obligations of each of the cross guarantors, contain a statement:
(i) that a copy of the Registered Bank’s most recent Supplemental Disclosure Statement, which contains a copy of the full guarantee contract, will be provided immediately at no charge to any person requesting a copy where the request is made at the Registered Bank’s head office;
(ii) specifying the categories of places where a copy of the Registered Bank’s most recent Supplemental Disclosure Statement, which contains a copy of the full guarantee contract, will be provided at no charge to any person within 5 Working Days of a request for a copy having been made;
unless the content of the Supplemental Disclosure Statement is contained in the General Short Form Disclosure Statement.
8. Conditions of Registration—(1) The General Short Form Disclosure Statement shall either:
(a) state that a copy of the Registered Bank’s most recent Supplemental Disclosure Statement, which contains a copy of the Conditions of Registration applicable as at the date on which the signing of the Short Form Disclosure Statement, for or on behalf of all Directors and the New Zealand Chief Executive Officer, is completed will be provided immediately at no charge to any person requesting a copy where the request is made at the Registered Bank’s head office; and
(b) specify the categories of places where a copy of the Registered Bank’s most recent Supplemental Disclosure Statement, which contains a copy of the Conditions of Registration applicable as at the date on which the signing of the Short Form Disclosure Statement, for or on behalf of all Directors and the New Zealand Chief Executive Officer, is completed will be provided at no charge to any person within 5 Working Days of a request for a copy having been made; or
(c) contain a copy of the Conditions of Registration applicable as at the date on which the signing of the Short Form Disclosure Statement for or on behalf of all Directors and the New Zealand Chief Executive Officer, is completed.
(2) The General Short Form Disclosure Statement or the Supplemental Disclosure Statement, as applicable, shall state the date as from which the Conditions of Registration published in accordance with subclause (1) of this clause apply.

9. Credit Ratings—If the Registered Bank is required, by a notice given to it under section 80 of the Act, to obtain or maintain a rating of its creditworthiness or financial condition by a person nominated or approved by the Reserve Bank, with respect to each rating obtained or maintained by the Registered Bank that complies with the notice given under section 80 the General Short Form Disclosure Statement shall state:
(a) the name of the person who gave the rating;
(b) the type of rating;
(c) the current rating and all qualifications to that rating;
(d) any changes made to the rating in the two years preceding the Off-Quarter Balance Date and the date on which any such change occurred;
(e) descriptions or explanations of all steps in the applicable rating scales.
Part IV
Financial and Supplementary Disclosures to be Contained in General Short Form Disclosure Statement
10. Content of Financial and Supplementary Disclosures—The General Short Form Disclosure Statement shall contain short form financial statements and supplementary information for the Banking Group which include the information prescribed by the Schedules to this Order.
10A. Insurance Business—The General Short Form Disclosure Statement shall state whether the Banking Group conducts any Insurance Business, and if so, contain the following information:
(1) a description of the nature of each class of that Insurance Business;
(2) the aggregate amount of Insurance Business, where the amount so disclosed is calculated in accordance with the Registered Bank’s Conditions of Registration;
(3) comparatives for the previous corresponding period for the information required to be disclosed pursuant to subclause 10A(2).
10B. Non-Consolidated Activities—The General Short Form Disclosure Statement shall contain a statement as to whether
the Overseas Bank conducts in New Zealand outside the Banking Group any Insurance Business or non-financial activities; and if so
(1) a brief explanation of the Overseas Bank’s involvement in that business or activities;
(2) the total assets, total equity, and total profits before and after tax of that business or those activities on a consolidated basis, separately for Insurance Business and for non-financial activities, as applicable, and if that business or those activities are conducted by an overseas incorporated company, separately in respect of the overseas company’s group and that group’s New Zealand Business;
(3) comparatives for the previous corresponding period for the information required to be disclosed pursuant to
subclause 10B(2);
(4) if the content of the Supplemental Disclosure Statement is not contained in the General Short Form Disclosure Statement, a statement that a copy of the Registered Bank’s most recent Supplemental Disclosure Statement which contains the most recent publicly available financial statements and group financial statements for:
– Insurance Business conducted in New Zealand outside the Banking Group; and
– non-financial activities conducted in New Zealand outside the Banking Group;
(separately, as applicable) will be provided at no charge to any person requesting a copy where the request is made at the Registered Bank’s head office, or within five Working Days where the request is made at (state the categories of places).
11. Auditor’s Report—Where the General Short Form Disclosure Statement has been subject to audit or review by an external auditor, the General Short Form Disclosure Statement shall state the nature and scope of that audit or review and contain a copy of the auditor’s report.
12. The Directors’ and the New Zealand Chief Executive Officer’s Statement—The General Short Form Disclosure Statement shall contain:
(1) a statement by the Directors and the New Zealand Chief Executive Officer as to whether each Director and the
New Zealand Chief Executive Officer believes, after due enquiry, that:
(a) the Short Form Disclosure Statement contains all the information that is required by this Order;
(b) the Short Form Disclosure Statement is not false or misleading;
as at the date on which the Short Form Disclosure Statement is signed; and
(2) a statement by the Directors and the New Zealand Chief Executive Officer as to whether each Director and the
New Zealand Chief Executive Officer believes, after due enquiry, that:
(a) the Registered Bank has complied with the Conditions of Registration; and
(b) the Registered Bank had systems in place to monitor and control adequately the Banking Group’s Material risks, including Credit Risk, concentration of Credit Risk, Interest Rate Risk, Currency Risk, Equity Risk, liquidity risk and other business risks, and that those systems were being properly applied;
over the First Quarter Accounting Period or Third Quarter Accounting Period.
13. Financial Statements of the Overseas Bank and Overseas Banking Group—The General Short Form Disclosure Statement shall contain a statement:
(1) that a copy of the Registered Bank’s most recent Supplemental Disclosure Statement, which contains a copy of the most recent publicly available financial statements of the Overseas Bank and Overseas Banking Group, will be provided immediately at no charge to any person requesting a copy where the request is made at the Registered Bank’s head office;
(2) specifying the categories of places where a copy of the Registered Bank’s most recent Supplemental Disclosure Statement, which contains a copy of the most recent publicly available financial statements of the Overseas Bank and Overseas Banking Group, will be provided at no charge to any person within 5 Working Days of a request for a copy having been made;
unless the content of the Supplemental Disclosure Statement is contained in the General Short Form Disclosure Statement.
Part V
Supplemental Disclosure Statement
14. General Matters—(1) Subject to subclause (2) of this clause, the Supplemental Disclosure Statement shall state only
the information specified in clauses 15, 16, 17 and 18 of this Order.
(2) If a Supplemental Disclosure Statement would be false or misleading as a result of stating the information specified in subclause (1) of this clause, information and explanations that will make the Supplemental Disclosure Statement not false or misleading shall also be stated.
15. Guarantors—(1) Where a General Short Form Disclosure Statement states that a person guarantees any Material obligations of the Overseas Bank, and subclause (2) of this clause does not apply, the Supplemental Disclosure Statement shall contain a copy of the full guarantee contract and the most recent financial statements and group financial statements of the guarantor, together with a copy of the audit report (if any) relating to those statements, unless this information is already contained within the General Short Form Disclosure Statement.
(2) Where a General Short Form Disclosure Statement states that a person or persons have entered into any Material cross guaranteeing arrangements with the Overseas Bank, the Supplemental Disclosure Statement shall contain a copy of the full guarantee contract if:
(a) there is a single contract which sets out the rights and obligations of all the cross guarantors; or
(b) there is a standard contract which is representative of the rights and obligations of each of the cross guarantors;
unless this information is already contained within the General Short Form Disclosure Statement.
16. Conditions of Registration—The Supplemental Disclosure Statement shall contain a copy of the Conditions of Registration which are applicable as at the date on which the signing of the Short Form Disclosure Statement, for or on
behalf of all Directors and the New Zealand Chief Executive Officer is completed, and state the date as from which such Conditions of Registration apply, unless this information is already contained within the General Short Form Disclosure Statement.
17. Financial Statements of the Overseas Bank and Overseas Banking Group—The Supplemental Disclosure Statement shall contain a copy of the most recent publicly available financial statements of the Overseas Bank and Overseas Banking Group, unless this information is already contained within the General Short Form Disclosure Statement.
18. Financial Statements of Insurance Business and Non-Financial Activities—Where the Overseas Bank conducts in New Zealand outside the Banking Group any Insurance Business or non-financial activities, the Supplemental Disclosure Statement shall contain a copy of the most recent publicly available financial statements and group financial statements of that business or those activities (separately for the Insurance Business and for non-financial activities, as applicable), unless this information is already contained within the General Short Form Disclosure Statement.
DIANE MORCOM, Clerk of the Executive Council.
———
First Schedule
Short Form Financial Statements
1. The information required to be disclosed pursuant to clause 3 of this Schedule shall be presented in New Zealand dollars, and shall include comparative figures for the previous corresponding period.
2. The General Short Form Disclosure Statement shall contain a statement as to whether there have been any changes in accounting policies since the Publication Date of the previous Disclosure Statement, and, if so, a summary of those changes.
3. The General Short Form Disclosure Statement shall contain the following financial information for the Banking Group, in such format as the Registered Bank determines, for the First Quarter Accounting Period or Third Quarter Accounting Period, or as at the Off-Quarter Balance Date, as the case may be.
Financial Performance
1. Interest revenue
2. Interest expense
3. Net interest income
4. Net trading gains/losses
5. Other operating revenue
6. Other operating expenses
7. Impaired asset expense
8. Operating profit/(loss) before tax
9. Taxation expense/(credit)
10. Operating profit/(loss) after tax
11. Income from associates accounted for on the basis of the equity method (net of tax)
12. Minority interests
13. Net profit/(loss) after tax
14. Extraordinary items (and nature thereof)
15. Net profit/(loss) after tax and extraordinary items
16. Amount of branch profits repatriated
17. Other adjustments to current period’s net profit/(loss)
18. Retained profit/(loss)
Financial Position
Assets
1. Cash and demand balances with central banks
2. Balances with other financial institutions which may be withdrawn without prior notice
3. Other securities eligible for refinancing by central banks
4. Other securities held for liquidity and other purposes
5. Equity investment securities
6. Other investment securities
7. Bills accepted but not held in a portfolio (if recognised)
8. Loans, advances and lease finance
(Note: Each of the above categories of assets shall be shown net of Specific Provisions)
9. Deferred tax asset
10. Intangible assets
11. Fixed assets
12. Other assets
13. Total assets
Liabilities and Head Office Account
14. Head office account
15. Balances of reserve accounts
(a) Revaluation reserves
(b) Other capital reserves
(c) Other revenue reserves
Sub-total
16. Balance of retained earnings
17. Minority interest
18. Term and/or perpetual subordinated debt
19. Deposits and other borrowings
20. Deferred tax liability
21. Other liabilities
22. Total liabilities
23. General provision
24. Total interest earning and discount bearing assets
25. Total interest and discount bearing liabilities
26. Where assets presented in the statement of financial position have been used to secure any obligations, the nature and amount of those assets
27. The nature and amount of any assets not legally owned but presented in the statement of financial position
28. The total liabilities of the Registered Bank in New Zealand, net of amounts due to related parties (including amounts due to a subsidiary or affiliate of the Registered Bank)
29. If applicable, the total Retail Deposits of the Registered Bank in New Zealand, as defined in the Registered Bank’s Conditions of Registration
Second Schedule
The Size and Nature of Business of the Banking Group
The General Short Form Disclosure Statement shall contain the information specified below, in such format as the Registered Bank determines, derived in accordance with the Reserve Bank document entitled Capital Adequacy Framework (BS2) as amended from time to time, in respect of the Banking Group as at the Off-Quarter Balance Date.
Risk Weighted Exposures
(1) Calculation of Balance Sheet Exposures
Amount Risk Weight Risk Weighted Exposure
Cash and short term claims on Government 0%
Long term claims on Government 10%
Claims on banks 20%
Claims on public sector entities 20%
Residential mortgages 50%
Other 100%
Total assets
(2) Calculation of Off-Balance Sheet Exposures
Amount Credit Conversion Factor Credit Equivalent Amount Average Counterparty Risk Weight Risk Weighted Exposure
Direct credit substitutes 100%
Asset sales with recourse 100%
Commitments with certain drawdown 100%
Underwriting and sub-underwriting facilities 50%
Transaction related contingent items 50%
Short term, self liquidating trade related contingencies 20%
Other commitments to provide financial services which have an original maturity of 1 year or more 50%
Other commitments with an original maturity ofless than 1 year or which can be unconditionally cancelled at any time 0%
Market related contracts1 N/A
(a) Foreign exchange contracts
(b) Interest rate contracts
(c) Other
Total off-balance sheet exposures
Risk Weighted Exposures
1Specify whether the current exposure or original exposure method was used to calculate the credit equivalent amount on these contracts.
Third Schedule
Capital Adequacy of the Overseas Bank and Overseas Banking Group
1. The information required to be disclosed pursuant to clause 2 of this Schedule shall include comparative figures for the previous corresponding period, where that information is publicly available.
2. The General Short Form Disclosure Statement shall contain the most recent publicly available information specified in respect of the capital adequacy ratios of the Overseas Bank and the Overseas Banking Group:
(a) Tier One Capital expressed as a percentage of risk weighted exposures;
(b) Capital expressed as a percentage of risk weighted exposures; and
(c) the date to which the measures of Tier One Capital and Capital relate.
Fourth Schedule
Asset Quality
1. The information required to be disclosed pursuant to clause 2(a) of this Schedule shall include comparative figures for the previous corresponding period.
2. The General Short Form Disclosure Statement shall contain, in respect of the Banking Group as at the Off-Quarter Balance Date, the following information:
(a) in respect of each of the following classes of assets:
(i) Non-Accrual Assets;
(ii) Restructured Assets;
(iii) Real Estate Assets Acquired Through the Enforcement of Security;
(iv) Other Assets Acquired Through the Enforcement of Security;
(v) Past Due Assets;
(va) Other Assets Under Administration;
the following information:
(vi) the aggregate amount which has been recognised; and
(vii) the aggregate amount which has not been recognised;
before deducting provisions for expected loss or provisions for diminution in asset value; and
(viii) the aggregate amount of Specific Provisions or provisions for diminution in asset value;
(ix) the aggregate amount of General Provisions (if any);
(b) information on movements in the balances of total Specific Provisions or provisions for diminution in asset value over the First Quarter Accounting Period or Third Quarter Accounting Period, for each of the classes of assets set out in subparagraphs (i) to (va) of clause 2(a) of this Schedule, separately disclosing:
(i) opening balance;
(ii) charge (credit) to the statement of financial performance for increase/decrease in Specific Provisions or provisions for diminution in asset value;
(iii) amounts written-off;
(iv) write-downs of Assets Acquired Through the Enforcement of Security;
(v) recoveries of provisions and write-offs charged in previous periods;
(vi) other movements, and the nature thereof;
(vii) closing balance;
with movements reconciled to the charges allocated to the statement of financial performance; and
(c) information on movements in the balance of the General Provision over the First Quarter Accounting Period or Third Quarter Accounting Period, separately disclosing:
(i) opening balance;
(ii) charge (credit) to the statement of financial performance for increase/decrease in the General Provision;
(iii) other movements, and the nature thereof;
(iv) closing balance;
with movements reconciled to the charges allocated to the statement of financial performance.
Fifth Schedule
Concentration of Credit Exposures to Individual Counterparties
1. For the purposes of this Schedule, Credit Exposure information shall be disclosed either on the basis of:
(a) actual Credit Exposures; or
(b) internal limits, provided that those limits were not Materially exceeded during the First Quarter Accounting Period or the Third Quarter Accounting Period.
The General Short Form Disclosure Statement shall state the method used.
2. For the purposes of this Schedule:
(a) the information disclosed shall include comparative figures for the previous corresponding period;
(b) Credit Exposure information shall:
(i) relate only to exposures held in the financial records of the Banking Group;
(ii) be calculated net of Specific Provisions; and
(iii) exclude Credit Exposures to any OECD Government.
3. For the purposes of this Schedule, the Overseas Banking Group’s Equity shall be either that group’s Equity determined as at the Off-Quarter Balance Date, or the most recently publicly disclosed amount. Where the Overseas Banking Group’s Equity is not determined as at the Off-Quarter Balance Date, the General Short Form Disclosure Statement shall state the date to which the measure of Equity relates.
4. The General Short Form Disclosure Statement shall disclose:
(a) the number of individual Bank Counterparties (not being members of a Group of Closely Related Counterparties) and Groups of Closely Related Counterparties of which a Bank is the parent to whom the Banking Group has an aggregate Credit Exposure which equals or exceeds 10% of the Overseas Banking Group’s Equity; and
(b) the number of individual non Bank Counterparties (not being members of a Group of Closely Related Counterparties) and Groups of Closely Related Counterparties of which a Bank is not the parent to whom the Banking Group has an aggregate Credit Exposure which equals or exceeds 10% of the Overseas Banking Group’s Equity;
as at the Off-Quarter Balance Date and in respect of peak end-of-day aggregate Credit Exposures for the First Quarter Accounting Period or the most recent quarter of the Third Quarter Accounting Period, in successive ranges of 10% of Equity, commencing at 10% of Equity.
5. For the purposes of this Schedule, peak end-of-day aggregate Credit Exposure to each individual Counterparty or a Group of Closely Related Counterparties for the First Quarter Accounting Period or the most recent quarter of the Third Quarter Accounting Period shall be derived by determining the maximum end-of-day aggregate amount of Credit Exposure over the quarter, and then dividing that amount by:
(a) the Overseas Banking Group’s Equity as at the end of the quarter; or
(b) the Overseas Banking Group’s Equity at the date the maximum end-of-day aggregate amount of Credit Exposure occurred.
A Registered Bank shall state in the General Short Form Disclosure Statement which of the methods it has used to derive peak ratio information.
6. The General Short Form Disclosure Statement shall disclose the following information, as at the Off-Quarter Balance Date, separately for counterparties referred to in subclause 4(a) of this Schedule, and separately for counterparties referred to in subclause 4(b) of this Schedule:
(a) the percentage and amount of aggregate Credit Exposure that is of an investment grade credit rating;
(b) the percentage and amount of aggregate Credit Exposure that is below an investment grade credit rating; and
(c) the percentage and amount of aggregate Credit Exposure that is not included in subclauses 6(a) or 6(b) of this Schedule.
7. For the purposes of clause 6 of this Schedule:
(a) a credit rating shall mean a credit rating which meets all of the following criteria:
(i) in the case of a Group of Closely Related Counterparties, a credit rating which is applicable to the entity heading the Group of Closely Related Counterparties; or in the case of an individual Counterparty (not being a member of a Group of Closely Related Counterparties), a credit rating which is applicable to the individual Counterparty;
(ii) a credit rating which is applicable to the relevant entity’s long term senior unsecured obligations payable in New Zealand, in New Zealand dollars; or which is applicable to the relevant entity’s long term senior unsecured foreign currency obligations;
(iii) a credit rating which has been given by a rating agency which has been approved by the Reserve Bank of
New Zealand under section 80 of the Act;
(b) where an entity has two or more credit ratings that meet all the criteria in subclause 7(a) of this clause and those credit ratings are not the same, then the lower credit rating shall apply;
(c) an investment grade credit rating means a credit rating of BBB- or Baa3 or above, or its equivalent;
(d) in respect of the counterparties to which either subclause 4(a) or 4(b) relates, the percentage of aggregate Credit Exposure shall be derived by:
(i) taking the aggregate Credit Exposure as at the Off-Quarter Balance Date to each individual Counterparty (not being members of a Group of Closely Related Counterparties) and to each Group of Closely Related Counterparties and adding all those amounts;
(ii) taking the aggregate Credit Exposure as at the Off-Quarter Balance Date to each individual Counterparty (not being members of a Group of Closely Related Counterparties) and to each Group of Closely Related Counterparties that meet the criteria specified in subclauses 6(a), 6(b), and 6(c) respectively, and adding all the amounts in respect of each subclause;
(iii) dividing each sum derived in accordance with subclause 7(d)(ii) of this clause by the sum derived in subclause 7(d)(i) of this clause, and representing this information as a percentage.
Sixth Schedule
Risk Management Policies
1. Where, since the Publication Date of the previous Disclosure Statement, there has been a Material change in the Banking Group’s policies for managing any of the following risks:
(a) Credit Risk, including concentrations of Credit Risk, intra-day Credit Risk, Credit Risk to Bank Counterparties and related party Credit Risk;
(b) Currency Risk;
(c) Interest Rate Risk;
(d) Equity Risk;
(e) liquidity risk;
(f) any other Material business risk to which the Banking Group is exposed;
the General Short Form Disclosure Statement shall contain a statement of the nature of those changes.
2. If, since the Publication Date of the previous Disclosure Statement, the Banking Group has become exposed to a new category of risk specified in clause 1 of this Schedule to which the Banking Group was not previously exposed, the General Short Form Disclosure Statement shall contain a general description of:
(a) the nature of that risk and the activities of the Banking Group which give rise to that risk;
(b) the methods used to identify and monitor exposure to that risk, including the frequency with which exposures are monitored; and
(c) the systems and procedures for controlling that risk, including, where applicable, whether exposure limits are employed, any policies with respect to collateral or other security, and any policies on the use of Financial Instruments to mitigate or hedge risks.
Seventh Schedule
Exposures to Market Risk
1. (1) A Registered Bank shall disclose the amount of Aggregate Market Risk Exposures of the Banking Group in respect of each category of Aggregate Market Risk Exposure on the basis of:
(a) Aggregate Market Risk Exposures derived in accordance with Schedule 8 of this Order; or
(b) the Banking Group’s internal operating limits applicable to the relevant category of Aggregate Market Risk Exposure, but only if the Aggregate Market Risk Exposure in that category has not Materially exceeded those limits at any time during the First Quarter Accounting Period or the Third Quarter Accounting Period. For the avoidance of doubt, where a Registered Bank discloses the Aggregate Market Risk Exposures of the Banking Group on the basis of internal operating limits, then subclauses 1(b), 8(b), and 11(b) of the Eighth Schedule also apply.
(2) The General Short Form Disclosure Statement shall state which of the above methods is used, and where the method used is that set out in clause 1(1)(a) of this Schedule, shall also state which of the methods described in clauses 1, 8 and 11 of the Eighth Schedule (for deriving Aggregate Interest Rate Exposure, Aggregate Foreign Currency Exposure and Aggregate Equity Exposure respectively) is used.
(3) Where, in respect of a category of Aggregate Market Risk Exposure, a Registered Bank uses different methods to derive Aggregate Market Risk Exposure in that category as at the Off-Quarter Balance Date, and in respect of peak end-of-day exposure since the commencement of the Accounting Period, the Registered Bank shall identify, in relation to each of the disclosures made pursuant to this Schedule, the method used.
2. The information required to be disclosed pursuant to clause 4 of this Schedule shall include comparative figures for the previous corresponding period.
3. For the purposes of this Schedule, the Overseas Banking Group’s Equity shall be either that group’s Equity determined as at the Off-Quarter Balance Date, or the most recently publicly disclosed amount. Where the Overseas Banking Group’s Equity is not determined as at the Off-Quarter Balance Date, the General Short Form Disclosure Statement shall state the date to which the measure of Equity relates.
4. The General Short Form Disclosure Statement shall disclose, in respect of the Banking Group:
(a) Aggregate Interest Rate Exposure;
(b) Aggregate Foreign Currency Exposure; and
(c) Aggregate Equity Exposure;
expressed both as an amount and as a percentage of the Overseas Banking Group’s Equity:
(i) as at the Off-Quarter Balance Date; and
(ii) in respect of peak end-of-day exposure for the First Quarter Accounting Period or the most recent quarter of the Third Quarter Accounting Period.
5. For the purposes of this Schedule, peak end-of-day exposure to each category of Aggregate Market Risk Exposure for the First Quarter Accounting Period or the most recent quarter of the Third Quarter Accounting Period shall be derived by determining the maximum end-of-day Aggregate Market Risk Exposure over the quarter, and then dividing that amount by:
(a) the Overseas Banking Group’s Equity as at the end of the quarter; or
(b) the Overseas Banking Group’s Equity at the date the maximum end-of-day Aggregate Market Risk Exposure occurred.
A Registered Bank shall state in the General Short Form Disclosure Statement which of these methods it has used to derive peak ratio information.
Eighth Schedule
Measurement of Market Risk Exposure
1. Aggregate Interest Rate Exposure—The Registered Bank shall derive the amount of Aggregate Interest Rate Exposure of the Banking Group in accordance with either:
(a) clauses 2 to 7 of this Schedule; or
(b) any other method, but only if the Aggregate Interest Rate Exposure derived in accordance with that method is not, in the opinion of the Registered Bank (such opinion to be based on reasonable grounds), Materially lower than the amount derived pursuant to clause 1(a) of this Schedule.
2. Interest Rate Exposure in a Single Currency—Interest Rate Exposure in a single currency is the total of:
(a) the directional interest rate risk;
(b) the vertical disallowance; and
(c) the horizontal disallowance;
in that currency.
3. Exposure to Directional Interest Rate Risk in a Single Currency—(1) The amount of directional interest rate risk in a single currency shall be derived by subtracting the aggregate amount of the change in the value of each Financial Liability (excluding equity instruments) of the Banking Group arising from a directional change in interest rates in that currency from the aggregate amount of the change in the value of each Financial Asset (excluding equity instruments) of the Banking Group, arising from a directional change in interest rates in that currency.
(2) The value of a Financial Instrument is:
(a) in the case of an unrecognised Financial Instrument and a recognised Financial Instrument which is a market related contract, the face or contract amount of the Financial Instrument expressed in New Zealand dollars using the relevant spot exchange rate; and
(b) in the case of other Financial Instruments, the carrying amount of the Financial Instrument expressed in
New Zealand dollars using the relevant spot exchange rate.
(3) The change in the value of a Financial Instrument is derived by multiplying the value, or proportion of the value, of the Financial Instrument allocated to the applicable time band specified in Table 1, in accordance with clause 3(4), by the risk weight specified for that time band in Table 1.
Table 1: Time Bands, Risk Weights, and Assumed Interest Rate Changes
Time Bands
up to 1 mth 1-6 mths 6-12 mths 1-2 yrs 2-4 yrs 4-6 yrs 6-10 yrs Over10 yrs
Assumed Interest Rate Change(%) 1.0 1.0 1.0 0.9 0.8 0.7 0.6 0.6
Risk weights (%) 0 0.3 0.7 1.3 2.0 3.0 3.5 4.4
(4) Subject to clauses 3(5) and 3(6) of this Schedule, the value of each Financial Instrument, or a proportion of it, shall be allocated to the time band specified in Table 1 in a manner which the Registered Bank believes, on reasonable grounds, reflects the date on which the interest rate applicable to the Financial Instrument, or proportion of the Financial Instrument, will be altered, or the date at which the principal, or a proportion of the principal, will be paid, notwithstanding the Interest Rate Repricing Date of the Financial Instrument.
(5) Notwithstanding clause 3(4) of this Schedule:
(a) a Registered Bank may exclude from the application of clause 3(4) of this Schedule the value, or the appropriate proportion of the value, of those Financial Instruments which meet the netting criteria contained in clause 4; and
(b) the aggregate value, or the appropriate proportion of the aggregate value, of all Rate Insensitive Retail Assets and of all Rate Insensitive Retail Liabilities shall be allocated to the time bands specified in Table 2 in accordance with the percentages set out in Table 2.
Table 2: Allocation of the value of Rate Insensitive Retail Products across time bands
Time Bands
up to 1 mth 1-6 mths 6-12 mths 1-2 yrs 2-4 yrs 4-6 yrs
Percentage of aggregate value 5% 5% 10% 20% 40% 20%
(6) A Registered Bank may exclude the value of options and, instead, use its own methodology to determine the Interest Rate Exposure in any currency arising from options and add the amount so derived to the total Interest Rate Exposure in that currency.
4. Netting Criteria—A Registered Bank may exclude the value of Financial Instruments in respect of which it has matched positions which meet any one of the following criteria:
(a) the matched position comprises the same Financial Instruments with the same issuer, coupon, currency and maturity; or
(b) (i) with respect to matched positions comprising futures, the underlying Financial Instruments to which the futures relate:
(A) are for the same product;
(B) have the same value or notional value;
(C) are denominated in the same currency; and
(D) mature within seven days of each other; or
(ii) with respect to matched positions comprising swaps (including separate legs of different swaps) or FRAs, the underlying Financial Instruments to which the swaps or FRAs relate:
(A) are for the same product;
(B) have the same value or notional value;
(C) are denominated in the same currency;
(D) have reference rates (for floating rate positions) which are identical;
(E) have coupon rates which are identical or which do not differ by more than 15 basis points; and
(F) have the time to run before the next Interest Rate Repricing Date within the following limits:
Earliest Repricing Date Limits
Less than one month hence: same day
Between one month and one year hence: within seven days
More than one year hence: within thirty days;
or
(iii) with respect to matched positions comprising forwards, the underlying Financial Instruments to which the forwards relate:
(A) are for the same product;
(B) have the same value or notional value;
(C) are denominated in the same currency; and
(D) have the time to run before the next Interest Rate Repricing Date within the following limits:
Earliest Repricing Date Limits
Less than one month hence: same day
Between one month and one year hence: within seven days
More than one year hence: within thirty days.
5. The Amount of Vertical Disallowance in a Single Currency—(1) The amount of vertical disallowance in a single currency is the sum of the vertical disallowances calculated in accordance with clause 5(2) for each of the time bands specified in Table 1 of this Schedule.
(2) The amount of vertical disallowance in a time band shall be calculated as follows:
(a) derive the risk weighted matched position in the time band (which is either the lesser of the sum of the absolute values of the Financial Assets and the sum of the absolute values of the Financial Liabilities in that time band,
or, if those sums are equal, that sum, multiplied by the risk weight for that time band);
(b) derive the risk weighted value of the Rate Insensitive Retail Products in that time band (which is the sum of the absolute values of the Rate Insensitive Retail Assets and Rate Insensitive Retail Liabilities in that time band multiplied by the risk weight for that time band);
(c) if the risk weighted matched position is less than or equal to the risk weighted value of the Rate Insensitive Retail Products in a time band, then the vertical disallowance amount for that time band is the risk weighted matched position multiplied by 20%;
(d) if the risk weighted matched position is greater than the risk weighted value of the Rate Insensitive Retail Products in a time band, then the vertical disallowance amount for that time band is:
(i) the risk weighted value of the Rate Insensitive Retail Products multiplied by 20%; plus
(ii) the difference between the risk weighted matched position and the risk weighted value of the Rate Insensitive Retail Products, multiplied by 5%.
(3) The vertical disallowance in a currency shall have the same sign (positive or negative) as the directional risk calculated for that currency.
6. The Amount of Horizontal Disallowance in a Single Currency—(1) The amount of horizontal disallowance in a single currency shall be calculated in accordance with clauses 6(2) to 6(6).
(2) Allocate the time bands specified in Table 1 of this Schedule to the three time zones specified in Table 3.
Table 3: Time zones
Time Bands Time Zones
up to 1 month
1-6 months Zone 1
6-12 months
1-2 years
2-4 years
4-6 years
6-10 years Zone 3
over 10 years

(3) Calculate the amount of the intra-zone disallowance in each time zone as follows:
(a) derive the risk weighted net position in each time band (which is the amount of the risk weighted Financial Assets less the amount of the risk weighted Financial Liabilities in that time band). If the risk weighted net position in a time band is positive, this is a risk weighted long position and if it is negative, this is a risk weighted short position;
(b) derive the aggregate risk weighted long position in each time zone (which is the sum of any risk weighted long positions in the time bands in that time zone) and the aggregate risk weighted short position in each time zone (which is the sum of any risk weighted short positions in the time bands in that time zone);
(c) derive the matched position in each time zone (which is either the lesser of the absolute value of the aggregate risk weighted long position and the absolute value of the aggregate risk weighted short position in that time zone,
or, if the absolute values of those positions are equal, that absolute value), if any;
(d) the amount of intra-zone disallowance in a time zone is the value of the matched position in that time zone multiplied by the disallowance factor for that time zone specified in Table 4. If there is no matched position in a time zone, the amount of the intra-zone disallowance in that time zone is zero.
Table 4: Intra-zone disallowances
Time Zones Disallowance Factors
Zone 1 40%
Zone 2 30%
Zone 3 30%
(4) Calculate the amount of the inter-zone disallowances as follows:
(a) inter-zone disallowances are derived in the following order: time zones 1 and 2, 2 and 3, and 1 and 3. The inter-zone disallowance factors which must be used to derive the inter-zone disallowance amounts are specified in
Table 5;
Table 5: Inter-zone disallowances
Time Zones Disallowance Factors
Zones 1 and 2 40%
Zones 2 and 3 40%
Zones 1 and 3 100%
(b) derive the residual position in each time zone (which is the net amount of the aggregate risk weighted long position and the aggregate risk weighted short position). If the residual position is positive this is a residual long
position and if it is negative this is a residual short position;
(c) there is a matched position between time zones 1 and 2 if there is a residual long position in one time zone and a residual short position in the other. The matched position is either the smaller of the absolute value of the residual long position and the absolute value of the residual short position, or, if the absolute values of those positions are equal, that absolute value. If there is no matched position, the amount of horizontal disallowance is zero. If there is a matched position, then the amount of horizontal disallowance between time zones 1 and 2 is the value of the matched position multiplied by the disallowance factor for time zones 1 and 2 specified in Table 5;
(d) derive the net residual position in time zone 2, by taking the difference between the absolute value of the residual position in time zone 2 and the matched position between time zones 1 and 2, and allocating to that amount, if any, the sign of the residual position in time zone 2. If the net residual position in time zone 2 is positive this is a net residual long position and if it is negative this is a net residual short position;
(e) there is a matched position between time zones 2 and 3 if there is a net residual long position in time zone 2 and a residual short position in time zone 3 or a net residual short position in time zone 2 and a residual long position in time zone 3. The matched position is either the smaller of the absolute value of those residual positions, or, if the absolute values of those positions are equal, that absolute value. If there is no matched position, the amount of
the horizontal disallowance is zero. If there is a matched position then the amount of horizontal disallowance between time zones 2 and 3 is the value of the matched position multiplied by the disallowance factor for time zones 2 and 3 specified in Table 5;
(f) derive the net residual position in time zone 1 and in time zone 3:
(i) in time zone 1, by taking the difference between the absolute value of the residual position in time zone 1 and the matched position between time zones 1 and 2, and allocating to that amount, if any, the sign of the residual position in time zone 1;
(ii) in time zone 3, by taking the difference between the absolute value of the residual position in time zone 3 and the matched position between time zones 2 and 3, and allocating to that amount, if any, the sign of the residual position in time zone 3,
(if the net residual position in a time zone is positive this is a net residual long position and if it is negative this is a net residual short position);
(g) there is a matched position between time zones 1 and 3 if there is a net residual long position in one time zone and a net residual short position in the other. The matched position is either the smaller of the absolute value of the net residual long position and the absolute value of the net residual short position, or, if the absolute values of those positions are equal, that absolute value. If there is no matched position, the amount of horizontal disallowance is zero. If there is a matched position then the amount of horizontal disallowance between time zones 1 and 3 is the value of the matched position multiplied by the disallowance factor for time zones 1 and 3 specified in Table 5.
(5) The amount of the horizontal disallowance in a single currency is the aggregate of the amounts of intra-zone disallowances and inter-zone disallowances in that currency.
(6) The horizontal disallowance in a currency shall have the same sign (positive or negative) as the directional risk calculated for that currency.
7. Aggregate Interest Rate Exposure For All Currencies—A Banking Group’s Aggregate Interest Rate Exposure is the greater of the absolute value of the sum of any positive Interest Rate Exposures and the absolute value of the sum of any negative Interest Rate Exposures.
8. Aggregate Foreign Currency Exposure—The Registered Bank shall derive the amount of Aggregate Foreign Currency Exposure in accordance with either:
(a) clauses 9 and 10 of this Schedule; or
(b) any other method, but only if the Aggregate Foreign Currency Exposure derived in accordance with that method is not, in the opinion of the Registered Bank (such opinion to be based on reasonable grounds), Materially lower than the amount derived pursuant to clause 8(a) of this Schedule.
9. Foreign Currency Exposure in a Single Foreign Currency—(1) Subject to clauses 9(2) and 9(4) of this Schedule,
a Banking Group’s Foreign Currency Exposure in a single foreign currency is derived by:
(a) subtracting the aggregate amount of the value of Financial Liabilities (whether recognised or unrecognised) of the Banking Group in that foreign currency from the aggregate amount of the value of the Financial Assets (whether recognised or unrecognised) of the Banking Group in that foreign currency; and
(b) multiplying the amount derived in clause 9(a) of this Schedule by 0.08.
(2) Subject to clause 9(3), the value of a Financial Instrument is either:
(a) (i) in the case of an unrecognised Financial Instrument and a recognised Financial Instrument which is a market related contract, the face or contract amount of the Financial Instrument expressed in New Zealand dollars using the relevant spot exchange rate; and
(ii) in the case of other Financial Instruments, the carrying amount of the Financial Instrument expressed in
New Zealand dollars using the relevant spot exchange rate; or
(b) the present value of that Financial Instrument expressed in New Zealand dollars using the relevant spot exchange rate.
(3) Notwithstanding clause 9(2) of this Schedule, the value of options in a single foreign currency shall be either the delta equivalent value, or a value derived using the Registered Bank’s own method for valuing the open position arising from options in that foreign currency.
(4) For the purposes of clause 9(1) of this Schedule, Financial Instruments which have been issued by associates of the Registered Bank or which have been included in the Capital of the Overseas Banking Group shall not be included in
the calculation of the Banking Group’s Foreign Currency Exposure.
10. Aggregate Foreign Currency Exposure—A Banking Group’s Aggregate Foreign Currency Exposure is the absolute value of the greater of the sum of any positive Foreign Currency Exposures and the sum of any negative Foreign Currency Exposures.
11. Aggregate Equity Exposure—The Registered Bank shall derive the amount of its Aggregate Equity Exposure in accordance with either:
(a) clauses 12 and 13 of this Schedule; or
(b) any other method, but only if the Aggregate Equity Exposure derived in accordance with that method is not, in the opinion of the Registered Bank (such opinion to be based on reasonable grounds), Materially lower than the amount derived pursuant to clause 11(a) of this Schedule.
12. Equity Exposure in a Single Currency—(1) Subject to clauses 12(2) and 12(3) of this Schedule a Banking Group’s Equity Exposure in a single currency is derived by:
(a) subtracting the aggregate amount of the value of all of the equity instruments (whether recognised or unrecognised) of the Banking Group in that currency that are Financial Liabilities from the aggregate amount of the value of all the equity instruments (whether recognised or unrecognised) of the Banking Group in that currency that are Financial Assets; and
(b) multiplying the amount derived in clause 12(a) of this Schedule by 0.08.
(2) Notwithstanding clause 12(1) of this Schedule, the value of equity instruments issued by associates of the Registered Bank shall not be included in the calculation of the Banking Group’s Equity Exposure.
(3) Subject to clause 12(4) of this Schedule, the value of an equity instrument is:
(a) in the case of an unrecognised equity instrument and a recognised equity instrument which is a market related contract, the face or contract amount of the equity instrument expressed in New Zealand dollars using the relevant spot exchange rate; and
(b) in the case of other equity instruments, the carrying amount of the equity instrument expressed in New Zealand dollars using the relevant spot exchange rate.
(4) Notwithstanding clause 12(3) of this Schedule, the value of:
(a) a net equity futures position is the marked-to-market value of the notional underlying equity position; and
(b) a net equity option position is the delta equivalent value.
13. Aggregate Equity Exposure—The Banking Group’s Aggregate Equity Exposure is the sum of the absolute values of the Equity Exposures in each currency.
Explanatory Note
This note is not part of the Order in Council, but is intended to indicate its general effect.
This Order in Council is promulgated pursuant to section 81(1) of the Reserve Bank of New Zealand Act 1989 and applies to a registered bank which is incorporated in a country other than New Zealand, and which operates in New Zealand as a branch of the overseas bank, in respect of each such bank’s “off-quarters” (i.e. the first and third quarters of the bank’s financial year). It replaces the Registered Bank Disclosure Statement (Off-Quarter - Overseas Incorporated Registered Banks) Order 2005, and comes into force on 30 March 2007.
The principal amendments to the 2005 Order included in this 2007 Order are to provide for the fact that Registered Banks will be required to adopt New Zealand equivalents of international financial reporting standards and New Zealand equivalents of international accounting standards for accounting periods starting on or after 1 January 2007. Registered Banks have had the option of adopting these international standards early, over the period 1 January 2005 to 31 December 2006, but will be required by Accounting Standards Review Board requirements to adopt them for accounting periods starting on or after 1 January 2007. The existing disclosure requirements were amended in March 2005 to handle the early adoption option but those amendments will no longer be effective once the international standards are mandatory.
The three reporting dates end-March, end-June and end-September 2007 represent a transitional period during which registered banks will be reporting on a mixture of accounting standards. The first date on which all banks will be reporting subject to international standards will be 31 December 2007. As a result, some minor amendments are needed to the disclosure requirements to ensure that they contain the appropriate definitions and cross-references for banks on all combinations of reporting standards, for reporting dates beginning with 31 March 2007. The amendments are largely mechanical. They add references to new accounting standards. Some new definitions have been added and others have cross references to the new standards.
A description of the principal provisions of the revised disclosure regime is given below.
Under the disclosure regime, all registered banks are required to issue a public disclosure statement each quarter. The disclosure statement required to be published pursuant to this Order in Council comprises a Key Information Summary,
a General Short Form Disclosure Statement and, if applicable, a Supplemental Disclosure Statement.
The Key Information Summary provides a brief summary of key financial information on the registered bank and banking group, and must be made available free of charge immediately upon request. The Key Information Summary must also be displayed prominently in each bank branch and in any other customer-accessible bank premises, and made available
or displayed on a bank’s internet website.
The General Short Form Disclosure Statement is required to contain a range of financial and corporate information on the bank and its banking group. The General Short Form Disclosure Statement need not be displayed in each bank branch, but must be made available free of charge, immediately if the request is made at a bank’s head office, or within five working days if the request is made at a bank branch or at any customer-accessible bank premises other than the head office.
The information required to be included in a General Short Form Disclosure Statement includes:
a information about credit ratings the bank is required to have, and a disclosure of the current level of each such rating;
b short form financial statements for the banking group, including details on asset quality;
c information, both as at the end of the off-quarter and in respect of peak for the most recent quarter of the accounting period, on the banking group’s exposure concentrations to individual counterparties and groups of closely related counterparties;
d market risk information, both as at the end of the off-quarter and in respect of peak for the most recent quarter of the accounting period, on the banking group’s interest rate exposure, foreign currency exposure and equity exposure. A bank is required to disclose its exposure to each of these categories of market risk, both as an amount and as a percentage of the overseas banking group’s equity;
e descriptions of the banking group’s policies and systems for managing risks in respect of a new category of risk not previously incurred by the banking group;
f statements signed by the directors and the New Zealand chief executive officer of the bank, including an attestation as to whether the directors and the New Zealand chief executive officer are satisfied that the banking group had systems in place to monitor and control adequately the group’s material business risks and whether the controls have been properly applied over the reporting period, and a statement that the disclosure statement is not false or misleading.
The General Short Form Disclosure Statement required by this Order in Council is an abbreviated version of the General Disclosure Statement required by the Registered Bank Disclosure Statement (Full and Half-Year - Overseas Incorporated Registered Banks) Order 2007.
Each bank must also publish a Supplemental Disclosure Statement, unless the information it would include is contained in the General Short Form Disclosure Statement. The Supplemental Disclosure Statement must be made available free of charge, immediately if the request is made at a bank’s head office, or within five working days if the request is made at a bank branch or at any customer-accessible bank premises other than the head office. This Order in Council requires the following information to be contained in a Supplemental Disclosure Statement:
a the conditions of registration imposed by the Reserve Bank on the registered bank pursuant to section 74 of the Reserve Bank of New Zealand Act;
b the contract of guarantee and financial statements of any guarantor, where the material obligations of the overseas bank are guaranteed;
c where the overseas bank has entered into any material cross guaranteeing arrangements, a copy of the full guarantee contract if there is a contract which sets out, or is representative of, the rights and obligations of all the cross guarantors;
d the most recent publicly available financial statements of the overseas bank and overseas banking group of which the registered bank is part;
e where the overseas bank conducts in New Zealand outside the New Zealand banking group any insurance business or non-financial activities, the most recent publicly available financial statements of that business or those activities.
A bank has two months from its off-quarter balance date to publish the disclosure statements required by this Order in Council. The exception to this is where a bank elects to have its General Short Form Disclosure Statement audited by an external auditor, in which case the bank has three months to publish its disclosure statement.
The disclosure statements published pursuant to this Order in Council are not required to be audited nor to be subject to a limited review by an external auditor.
The disclosure statements required by this Order in Council must be signed by all the directors and the New Zealand chief executive officer of the bank. A director or New Zealand chief executive officer may authorise in writing another person to sign on his or her behalf.
The Reserve Bank of New Zealand Act provides for criminal and civil penalties where a bank’s disclosure statement is found to be false or misleading.
This Order in Council is administered in the Reserve Bank of New Zealand.