Feedback sought on policy for branches of overseas banks
Branches of overseas banks can be an important link between our economy and global financial markets. The objective of the review is to create a simple, coherent and transparent policy framework for branches that protects and promotes financial stability.
Promoting a strong, efficient and inclusive financial system is fundamental to the overall resilience of the New Zealand economy, Deputy Governor and General Manager for Financial Stability Christian Hawkesby says.
To maintain a healthy and vibrant financial system we need Te Pekanga – our regulated entities, including branches of overseas banks – to be sound, innovative and have constructive working relationships with us.
Key proposals outlined in the paper include:
- that all branches in New Zealand be restricted to engaging in wholesale business (that is with corporates, institutions and other wholesale investors), meaning they could not take retail deposits or offer products or services to retail customers;
- to limit the maximum size of a branch to NZ$15 billion in total assets; and that we continue to allow the dual registration of branches, provided:
- the relevant subsidiary and branch are sufficiently separate, and any identified risks are mitigated by specific conditions of registration; and dual-registered branches only conduct business with large wholesale customers – those with consolidated turnover greater than NZ$50 million.
RBNZ anticipate final decisions on the review to be taken in early 2023 after submissions on the second consultation have been considered.Alongside the second consultation paper, RBNZ have also published a summary of submissions in response to the first consultation paper.
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