Financial Aspects of Corporate Governance in New Zealand

Abstract

New Zealand’s financial system remains sound. The banks are well capitalised and have strengthened their funding base, while non-performing loans continue to fall. All banks comfortably meet the new Basel III minimum capital requirements introduced at the start of the year. Core funding ratios are also well above the required level. The main threats to the financial system are the risks associated with growing imbalances in the housing market. The Reserve Bank has introduced a slew of measures to combat the same.Over the past six months the Reserve Bank has continued to enhance the prudential regulatory framework to strengthen the soundness of the New Zealand financial system. The Reserve Bank’s review of the prudential regime for non-bank deposit-takers was completed in September 2013, and several legislative amendments are proposed to ensure the regime is appropriately targeted. A review has been undertaken of the oversight regime for payment and settlement systems, and it is expected that powers will be strengthened in this area.