RBNZ's Capital Review - How much capital is enough?

NZIPIM has completed a submission to the Reserve Bank's proposal to lift bank capital requirements for systemically important banks from a minimum 10.5% of risk weighted assets (RWA) to setting the Tier 1 capital ratio at 16% of RWA.

The proposal has the potential to increase lending rates for the agricultural and horticultural sectors as farm business enterprises attracts higher risk weighting in banks capital calculations than other sectors such as residential property. NZIPIM has recommended deeper consideration and analysis be undertaken by the Reserve Bank on likely unintended consequences of increasing bank capital requirements for our sector, among other recommendations. Download submission here