Branches of overseas banks can be an important link between our economy and global financial markets. The objective of the review is to create a simple, coherent and transparent policy framework for branches that protects and promotes financial stability.
“Branches of overseas banks play an important role in the finance sector and can provide valued services to New Zealand businesses and the wider economy.” Director of Prudential Policy Kate Le Quesne says.
We have been reviewing our Branch Policy in recognition that the current policy has been developed over time, which has resulted in some inconsistencies. We think these decisions balance the benefits branches bring to NZ whilst managing their risks.
In our August 2022 consultation we proposed new policy settings. We are now announcing the key decisions in the Branch Review, that include:
- restricting all branches in New Zealand to engaging in wholesale business (that is with corporates, institutions and other wholesale investors), meaning they could not take retail deposits or offer products or services to retail customers;
- limiting the maximum size of a branch to NZ$15 billion in total assets; and
- continuing to allow the dual registration of branches, provided:
- the relevant subsidiary and branch are sufficiently separate, and any identified risks are mitigated by specific conditions; and
- dual-registered branches only conduct business with large wholesale customers.
We have published a summary of these submissions alongside our responses to them, and a regulatory impact statement. We have also published the full, redacted versions of these submissions on our website.
We are now publishing a third consultation paper that proposes an approach to some of the implementation considerations for these key decisions, including the definition of large corporate and institutional customers, and a longer implementation timeline.
