RBNZ Opens Consultation on Plan to Cut Deposit-Taker Capital to NZ$5 Million

The Reserve Bank of New Zealand has begun a public consultation on overhauling prudential capital rules for banks and other deposit-takers, laying out two options that would materially reduce overall capital ratios compared with the framework adopted in 2019. A headline proposal would cut the minimum capital requirement for deposit-takers to NZ$5 million (about US$2.9 million) from the existing NZ$30 million. The central bank said the change would lower barriers to entry and reflects a greater risk appetite than when the current rules were set, while still safeguarding depositors and financial stability. Governor Christian Hawkesby said the review aims to balance protection of depositors with competition and economic efficiency. Finance Minister Nicola Willis welcomed the move, and the RBNZ noted it had drawn on feedback from a parliamentary banking inquiry and other stakeholders. The consultation closes later this year, with a final decision expected by year-end; the phased-in 2019 capital timetable through 2028 remains in place.