Source: Reserve Bank of New Zealand
17 December 2025 – The Reserve Bank of New Zealand (RBNZ) has released its decisions on the new capital settings applying to deposit takers.
“Following the completion of the review commissioned by the Board in March, we are pleased to announce modernised capital rules that will support an efficient and resilient financial system,” said Rodger Finlay, Chair of the RBNZ Board.
“We recalibrated our risk appetite to have regard to our new Financial Policy Remit, and to reflect important developments since 2019, including the introduction of the Depositor Compensation Scheme, and more intensive supervision, enforcement, and resolution approaches. This led us to ease common equity requirements across the system by around $5 billion compared to current levels, while still remaining confident in our system resilience.”
The package announced today includes reduced requirements for common equity, more granular risk weights, simplification of capital instruments, and greater alignment of instruments for the ‘big four’ banks with Australian settings. The final package further refines risk weights consulted on in August.
“Our approach is simple, strong, proportionate, and efficient. These new settings will reduce the overall cost of deposit takers’ funding, which we expect to see passed on as benefits to New Zealanders through increased lending and reduced rates, which we will monitor closely,” said Reserve Bank Governor, Dr Anna Breman.
“Small and mid-sized deposit takers should see a proportionately larger reduction than the four large banks, which should allow them to grow and compete more effectively.”
“Our review was short and sharp, but robust,” said Acting Assistant Governor of Financial Stability, Angus McGregor. “We were informed by over 40 high-quality submissions, supplemented by independent external reports and advice. It was essential that this review was transparent, open to challenge, and provides for enduring policy settings.”
“As a result of submissions, we made material changes to our proposals, including reducing some risk weights further to better reflect risk.”
“These internationally-calibrated settings bring us closer to alignment with Australia, while still recognising the New Zealand context and higher risk profile. To ensure the benefits of these new settings are realised promptly, we will commence an accelerated implementation in the early new year, with full implementation under the new Deposit Takers Act in 2028.”
“Our forward work programme also includes on-going refinements to risk weights and implementing our new resolution framework and instruments. This ensures New Zealanders can be confident in the safety, soundness, and efficiency of the financial system,” concluded Mr McGregor.
