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On 7 November 2023, the Reserve Bank of New Zealand (RBNZ) released its final decisions on the Review of Policy for Branches of Overseas Banks (Review of Policy for Branches).  These are consistent with the key proposals outlined in the RBNZ's second consultation paper and consulted on in August 2022.  The Review of Policy for Branches includes:

  • Restricting all branches of overseas incorporated banks in New Zealand to engaging in wholesale business (that is with corporates, institutions, and other wholesale investors).  This means they cannot take retail deposits or offer products or services to retail customers
  • Limiting the maximum size of a branch to NZ$15b in total assets
  • 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 of registration, and
    • dual-registered branches only conduct business with "large wholesale customers".

The RBNZ has also published a third consultation paper.  This consultation will close on 5 December 2023.   This consultation paper proposes that:

  • A "large wholesale customer" be defined as having either:
    • consolidated annual turnover of over NZ$50m, or
    • net assets of over NZ$50m.
  • Under the Deposit Takers Act 2023 (DTA), the RBNZ will regulate, supervise and set standards for all deposit takers, including banks, building societies, credit unions and finance companies within a single regulatory regime (Standards).  The RBNZ will implement the Review of Policy for Branches through either a Standard or conditions of licence issued under the DTA.

All branches will have to comply with the Review of Policy for Branches once the DTA is fully implemented, which is expected to be in 2028.

Please contact our financial services regulation team if you would like to discuss how the Review of Policy for Branches may affect you or would like any assistance with preparing a submission.