The Co operative Bank welcomes Reserve Bank capital changes that support competition

The Co-operative Bank today welcomed the Reserve Bank of New Zealand's final decisions on its review of key capital settings, noting that the changes will help strengthen competition for the benefit of New Zealand banking customers.

Chief Executive Mark Wilkshire said the decisions strike a better balance between financial stability and efficiency, while recognising the challenges faced by smaller banks.

"We are pleased to see the Reserve Bank respond to feedback from domestic banks by adjusting capital settings to reflect the risk levels and introducing more granular risk weights, which results in lower capital requirements. These changes will ease some of the constraints that have limited growth for smaller banks and will help us deliver more choice and better value for customers," said Wilkshire.

Key changes announced by the Reserve Bank include:

• Lower minimum capital ratios for all deposit takers compared to previous settings.
• Removal of Additional Tier 1 (AT1) instruments, simplifying the capital stack.
• More granular and risk-sensitive standardised risk weights, including reductions for low loan-to-value ratio (LVR) mortgages.
• No Loss Absorbing Capacity (LAC) requirement for domestic banks, which avoids additional complexity and cost.