The Reserve Bank has proposed a new policy for significant acquisitions by banks. Here is the full statement below.
The Reserve Bank has today released a consultation paper proposing a new policy for locally incorporated registered banks considering making significant acquisitions, investments or business mergers.
The consultation paper proposes that banks should be required to obtain a notice of non-objection from the Reserve Bank before undertaking such transactions.
Deputy Governor Grant Spencer said a bank’s board of directors is responsible for assessing the merits and risks of any significant acquisition.
“However, the proposed policy is intended to enable the Bank to assess any risks to the wider financial system arising from a significant acquisition before that acquisition takes place,” he said.
Under the proposal, a new Banking Supervision Handbook document entitled Significant Acquisitions Policy (BS15) will be issued.
This will provide the detail of the policy, including specifying what constitutes a significant acquisition and the information that would be required from banks.
The change will help to better align practices with international standards and is timely after the Global Financial Crisis.
3 Comments
Well this is completely in step with the merit regulation bias of the Reserve Bank, as opposed to the disclosure bias of the securities regulations; guess it is horses for courses...
if they are going to give with one hand (covered bonds) then they are going to take it away with the other (block acquisitions that may dilute the financial stability of a bank...
THis proposal is anticompetitive, anti NZ and ultra vires.
It stops good acquistions going ahead because a burocrat says so
It proposes a sliding scale for materiality and nothing for foreign branches- thereby advantaging Aussie and foreign owned banks over NZ owned banks
It moves its focus from looking at the soundness of the financial system - which it is obligated to do, to soundness of individual organisations - which it does not have the right to do - and because of the sliding scale, means tiny transactions will be looked at, rather than the real important systemcially important transactions only.
This is regulation out of control and the government should step in.
Am Ok if linked to soundness - and the transaction only impacts on the soundness of the system - but then should be a single scale of materiality - like they have for large banks re outsourcing, and local incorporation for retail deposits over $250 million
This is badly considered knee jerk policy
the question is are we still a free market economy or are we morphing into a socialist state? the actions taken by the rbnz over the past year or so suggest that we could soon become a part of China...core funding ratios, capital adequacy, risk weightings determined by the rbnz, now this ... all intervention by the state to tell the finance sector where and who to lend to.
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