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Finance Minister Nicola Willis has welcomed the Reserve Bank of New Zealand’s decision to ease bank capital requirements.
The Reserve Bank recently announced it was winding back some of the additional capital requirements imposed on banks in 2019 including adjusting risk weights.
“Since 2019 concerns have been raised that the Reserve Bank’s capital settings may be undermining competition and reducing lending to New Zealanders,” Willis says.
“Higher costs for banks translate to higher lending costs for New Zealanders and, potentially, less lending to the agricultural and other important sectors.
“Therefore, when I issued the new Financial Policy Remit to the Reserve Bank in 2024, I outlined the Government’s expectation that it should ensure that prudential regulation of the banking sector did not impede competition.
“The new requirements announced today remain prudent and strike a better, more graduated balance between risk and competition.
“In particular, the adjustments to risk weights are expected to enable smaller deposit takers to compete more effectively against the big four banks.
“They also open the door to more lending to the agriculture sector.
“These changes are part of a larger suite of measures to increase competition in the banking sector.
“The changes announced today will be introduced gradually over the coming years.
“They support our Government’s plan to fix the basics and build the future.”
