ANZ: new exposure rule may hit NZ arm

ANZ warns its New Zealand unit will be most affected by the Australian regulatory decision to protect banks from contagion risks by limiting their exposure to their units.

The bank says the Australian Prudential Regulation Authority (APRA) confirmed on Tuesday it would implement a previously announced proposal to reduce core capital that Australian deposit-taking institutions hold in its units from 50 per cent to 25 per cent.

The changes will come into effect from January 2021.

Australia’s No.4 lender by market value says the move might limit its ability to inject capital into ANZ Bank New Zealand and the unit will have to hold a larger portion of its earnings to meet capital requirements locally.

However, the lender says the final outcome of the new rules will depend on proposed capital requirements by New Zealand’s central bank that is in the consultation phase.

It’s also looking at potential exemptions from the APRA.

“We are open to considering appropriate transition arrangements on a case-by-case basis where specific entities request it,” APRA deputy chair John Lonsdale said.


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