New proposal for banks off-quarter reporting

In a bid to make banks’ off-quarter disclosure requirements less costly and more timely, the RBNZ is proposing that banks should adopt a new “dashboard” mechanism.

The proposal comes as part of the RBNZ’s recently-released conclusions on its stocktake of the rules applying to banks, finance companies and similar institutions.

Consultation on improving the efficiency, clarity and consistency of the rules for banks and non-bank deposit takers (NBDTs) took place from July to September 2015.

One of the key issues was the content and frequency of the disclosure statements that banks have to publish.

In particular, changes were proposed to the current requirement that banks must prepare “off-quarter” disclosure statements.

Most banks supported the idea of removing the requirement for prepare off-quarter disclosure statements altogether.

However, Reserve Bank Deputy Governor Grant Spencer said disclosure is fundamental to good market discipline, which is a key pillar of the RBNZ’s supervisory approach for banks.

Locally incorporated banks must provide some form of quarterly disclosure, but this could be done in a more timely and accessible manner, and at lower cost to the banks, he said.

For this reason, the RBNZ is now looking into the possibility of a new mechanism for providing these off-quarter disclosures.

This would involve the RBNZ publishing a quarterly electronic “dashboard” of key financial information on individual banks.

The information would be drawn from the statistical and prudential returns that the banks submit privately to the RBNZ.

Spencer said because the concept arose from further reflection on how to best address several issues, more consultation on it was required.

“We’ll develop a more detailed proposal for the dashboard in discussion with banks and other interested parties.” 

As a result of the stocktake, the RBNZ plans to enhance the transparency of its policy-making process by strengthening the communication around it.

Spencer said there was broad support for many of the RBNZ’s proposals, like improving the drafting and layout of the documents that lay out the rules for banks.

“We also received useful feedback on several matters relating to the prudential requirements for NBDTs, and will carry out further work on these.”

Capital requirements for banks were originally part of the stocktake, but the consultation document did not make material proposals on them.

However, some issues on capital requirements have been flagged for future work. There are also separate initiatives currently underway outside the scope of the stocktake.