Her Excellency The Rt Hon Dame CINDY KIRO, gnzm, qso, Governor-General

Order in Council

At Wellington this 22nd day of November 2021

Present:

Her Excellency the Governor-General in Council

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

Order

1. Title

This order is the Registered Bank Disclosure Statements (Overseas Incorporated Registered Banks) Order 2014 Amendment Order 2021 (No. 2).

2. Commencement

This order comes into force on 31 December 2021.

3. Principal Order Amended

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

4. Interpretation

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

(2) After the definition of “Basel III” insert:

BPR001: Glossary means the Reserve Bank document entitled “BPR001: Glossary”

BPR131: Standardised Credit Risk RWAs means the Reserve Bank document entitled “BPR131: Standardised Credit Risk RWAs”

BPR133: IRB Credit Risk RWAs means the Reserve Bank document entitled “BPR133: IRB Credit Risk RWAs”

BPR140: Market Risk means the Reserve Bank document entitled “BPR140: Market Risk”

BPR160: Insurance, Securitisation and Loan Transfers means the Reserve Bank document entitled “BPR160: Insurance, Securitisation and Loan Transfers”

(3) Repeal the definitions of “Capital Adequacy Framework (Standardised Approach) (BS2A)” and “Capital Adequacy Framework (Internal Models Based Approach) (BS2B)”

(4) Replace the definition of “equity” with “equity has the same meaning as “equity” given in “New Zealand Equivalent to the IASB Conceptual Framework for Financial Reporting” issued in 2018 (2018 NZ Conceptual Framework).”

(5) Replace the definition of “financial reporting group” with “financial reporting group means the New Zealand business of the registered bank and its subsidiaries as required to be reported in group financial statements under section 461B(2) of the Financial Markets Conduct Act 2013”.

(6) Replace the definition of “holding company” with “holding company has the same meaning as in section 5 of the Companies Act 1993, except for the definition of “subsidiary” which has the meaning as defined in this Order.”

(7) Repeal the definition of “insurance business.”

(8) In the definition of “past due” replace “NZ IFRS 7” with “NZ IFRS 9”.

(9) In the definition of “subsidiary”:

1. Replace the words “section 6(1)” with “section 5”; and
2. replace the words “Financial Markets Conduct Act 2013” with “Financial Reporting Act 2013.”

(10) Replace the defined term “ultimate holding company” with the new defined term “ultimate non-bank holding company”, having the same definition.

(11) In clause 2, insert a new subclause (2)(b) that states “if paragraph (a) does not apply, has the meaning given in BPR001: Glossary; or”.

(12) Replace old subclause (2)(b) with a new subclause (2)(c) that states “if neither paragraph (a) nor (b) applies, and if applicable, must be interpreted in a way that complies with generally accepted accounting practice”.

5. Clause 22 Amended

In subclause 22(1)(b), replace “Schedules 4, 7, 9 to 11 and 13” with “Schedules 4, 7, 9, 11 and 13”.

6. Clause 23 Amended

In subclause 23(1)(b), replace “Schedules 5, 7, 9, 10, 12 and 14” with “Schedules 5, 7, 9, 12 and 14”.

7. Clause 2 of Schedule 1 Amended

(1) In subclause 2(2)(a) of Schedule 1, replace “Schedules 4, 7, 10, 11 and 13” with “Schedules 4, 7, 11, and 13”.

(2) In subclause 2(2)(b) of Schedule 1, replace “Schedules 5, 7, 10, 12 and 14” with “Schedules 5, 7, 12, and 14”.

8. Clause 3 of Schedule 1 Amended

In subclause 3(b) of Schedule 1, replace “Schedules 5, 7, 10, 12 and 14, state—” with “Schedules 5, 7, 12, and 14, state—”.

9. Clause 2 of Schedule 2 Amended

(1) Replace the title of clause 2 of Schedule 2 with “Details of ultimate parent bank and ultimate non-bank holding company”.

(2) Replace subclause 2(b) of Schedule 2 with “the name and address for service of the ultimate non-bank holding company of the registered bank; and.”

10. Clause 1 of Schedule 3 Amended

(1) Replace the title of clause 1 of Schedule 3 with “Details of ultimate parent bank and ultimate non-bank holding company”.

(2) In clause 1 of Schedule 3, replace all instances of the term “ultimate holding company” with the term “ultimate non-bank holding company”.

11. Clause 1 of Schedule 9 Amended

(1) In subclause 1(1)(b) of Schedule 9 replace “Capital Adequacy Framework (Standardised Approach) (BS2A)” with “BPR131: Standardised Credit Risk RWAs.”

(2) In clause 1 of Schedule 9 replace all instances of the term “Capital Adequacy Framework (Internal Models Based Approach) (BS2B)” with the term “BPR133: IRB Credit Risk RWAs.”

(3) Replace subclause 1(7) with “The condition referred to in subclauses (1) and (4) is that the registered bank’s banking group includes a New Zealand incorporated registered bank that has been accredited by the Reserve Bank to use the internal models based approach to capital adequacy”.

12. Clause 2 of Schedule 9 Amended

(1) Replace clause 2(1)(b) of Schedule 9 with “derived on the basis that the notional capital charge for each category of market risk is the aggregate capital charge for that category of market risk derived in accordance with BPR140: Market Risk”.

(2) In the table under subclause 2(2) entitled “Market Risk”, replace the third row, first column words “Foreign Currency Risk” with “Currency Risk”.

13. Clause 4 of Schedule 9 Amended

Replace subclause 4(1)(a) of Schedule 9 with “BPR140: Market Risk; or”

14. Clause 4 of Schedule 11 Amended

Replace subclause 4(3) of Schedule 11 with “For the purpose of subclause (2), credit enhancement, affiliated insurance group, and funding must be interpreted in accordance with BPR160: Insurance, Securitisation and Loan Transfers”.

15. Clause 3 of Schedule 13 Amended

In clause 3 of Schedule 13, replace “ultimate holding company” with “ultimate non-bank holding company”.

16. Clause 5 of Schedule 13 Amended

Replace clause 5 of Schedule 13 with “A statement as to how users can access disclosures made by the ultimate parent bank or ultimate non-bank holding company in relation to capital adequacy requirements or risk management processes implemented by the ultimate parent bank or ultimate non-bank holding company”.

Dated this 2nd day of February 2022.

RACHEL HAYWARD, for Clerk of Executive Council.

Explanatory Note

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

This order comes into force on 31 December 2021. It amends the Registered Bank Disclosure Statements (Overseas Incorporated Registered Banks) Order 2014, published in a Supplement to the New Zealand Gazette, 21 February 2014, No. 21, page 542. The main purpose of this order is to update a number of cross-references and defined terms, consequential on changes made to the capital adequacy framework applying to New Zealand incorporated banks. The changes do not make any material difference to what branches of overseas incorporated registered banks have to disclose.

Note: This notice replaces the one published in the New Zealand Gazette, 30 November 2021, Notice No. 2021-sl5170, which was published in error.

This order is administered by the Reserve Bank of New Zealand.