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New Zealand's Central Bank disagrees with watchdog over capital settings

Published 04/22/2024, 05:32 PM
Updated 04/22/2024, 05:36 PM
© Reuters. FILE PHOTO: Pedestrians walk near the main entrance to the Reserve Bank of New Zealand located in central Wellington, New Zealand, July 3, 2017. REUTERS/David Gray/File Photo

By Lucy Craymer

WELLINGTON (Reuters) - New Zealand's central bank said on Tuesday it does not agree with the assessment of the country's competition watchdog that its prudential capital settings need to be reviewed.

In March, a draft Commerce Commission report found that there was limited competition in New Zealand's personal banking sector and one of its recommendation was that the central bank review its capital setting requirements.

Since 2008, the Reserve Bank of New Zealand has allowed larger banks to hold significantly less capital than smaller banks for some lending giving them in some cases a competitive advantage, according to the Commerce Commission.

© Reuters. FILE PHOTO: Pedestrians walk near the main entrance to the Reserve Bank of New Zealand located in central Wellington, New Zealand, July 3, 2017. REUTERS/David Gray/File Photo

RBNZ Deputy Governor Christian Hawkesby said the current bank capital framework is the result of a careful and extensive review process that occurred recently and is still being phased in.

"The Commission’s suggested changes to our risk-weighting framework in the draft report would lead to very marginal benefits to competition, and could have unintended consequences and put us out of step with international regulatory approaches," Hawkesby said.

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