17 NOVEMBER NEW ZEALAND GAZETTE

the General Disclosure Statement shall contain the information set out in clause 2 of this Schedule.

2. In relation to each risk identified in clause 1 of this Schedule, the General Disclosure Statement shall contain:

(a) an explanation of the nature of the risk and the activities of the Banking Group which give rise to that risk;

(b) a general description of the methods used to identify and monitor exposure to the risk, including the frequency with which exposures are monitored; and

(c) a general description of the systems and procedures for controlling the risk, including, where applicable, whether exposure limits are employed, any policies with respect to collateral or other security, and any policies on the use of Financial Instruments to mitigate or hedge risks.

3. The General Disclosure Statement shall contain a statement as to the nature and frequency of any reviews conducted in respect of the Banking Group’s risk management systems, including a statement as to whether any such reviews were conducted by a party external to the Banking Group, Ultimate Parent Bank or Ultimate Holding Company.

4. The General Disclosure Statement shall contain a statement as to whether the Banking Group has an internal audit function and, if so, its nature, including:

(a) organisational status, including formal and administrative reporting procedures;

(b) reference to the existence of an audit committee and, if applicable, the nature and scope of that committee; and

(c) scope of the internal audit function, including type and frequency of audits.

Explanatory Note

This note is not part of the Order in Council, but is intended to indicate its general effect.

This Order in Council is one of four Orders in Council promulgated pursuant to section 81 (1) of the Reserve Bank of New Zealand Act 1989. The Orders in Council provide for a new public disclosure regime for registered banks, replacing existing prospectus requirements imposed under the Securities Act 1978 on registered banks in respect of their offers of debt securities to the public. All four Orders in Council come into force on 1 January 1996.

The disclosure regime is part of a new set of arrangements being implemented by the Reserve Bank of New Zealand to supervise registered banks.

This Order in Council applies to a registered bank which is incorporated in New Zealand, in respect of each such bank’s end of financial year and half year.

All registered banks will be required to issue a public disclosure statement each quarter. The disclosure statement required to be published pursuant to this Order in Council comprises a Key Information Summary, a General Disclosure Statement and, if applicable, a Supplemental Disclosure Statement.

The Key Information Summary must be displayed prominently in each bank branch and must be available free of charge immediately upon request. The Key Information Summary provides a brief summary of key financial information on the registered bank and its banking group.

The General Disclosure Statement is required to contain a comprehensive range of financial and corporate information on the bank and its banking group. The General Disclosure Statement need not be displayed in each bank branch, but must be made available free of charge within five working days of a request having been made for it from a bank branch or agency, or immediately from a bank’s head office. The information required to be included in a General Disclosure Statement includes:

a general information on the structure of the bank, the members of the banking group and information on guarantee arrangements (where applicable);

b a statement as to whether the bank has a credit rating, and if so, a disclosure of that rating;

c comprehensive financial statements for the bank and banking group, prepared in accordance with generally accepted accounting practice, including asset quality and risk concentration information;

d information on capital adequacy (using the Reserve Bank of New Zealand’s capital adequacy framework);

e information, both as at the end of the half year and full year and peak over the accounting period to date, on the banking group’s exposure concentration to individual counterparties and groups of closely related counterparties and to connected persons;

f descriptions of the banking group’s policies and systems for identifying, monitoring and managing its risks;

g statements signed by the directors of the bank, including an attestation as to whether the directors are satisfied that the banking group’s internal controls are adequate for managing the group’s material business risks and whether the controls are being properly applied, and a statement that the disclosure statement is not false or misleading;

h information on the banking group’s funds management and securitisation activities, to the extent it has any;

i information on the directorate and auditors of the bank.

Each bank must publish a Supplemental Disclosure Statement, unless the information it would include is contained in the General Disclosure Statement. The Supplemental Disclosure Statement must be made available free of charge within five working days of a request being made for it at a bank branch or agency, or immediately from a bank’s head office. This Order in Council requires the following information to be contained in a Supplemental Disclosure Statement:

a the conditions of registration imposed by the Reserve Bank on the registered bank pursuant to section 74 of the Reserve Bank of New Zealand Act;

b the contract of guarantee and financial statements of any guarantor, where the material obligations of the registered bank or of a public issuer within the banking group are guaranteed.

A bank has three months after its balance date or interim balance date in which to publish the disclosure statements required by this Order in Council.

The disclosure statement in respect of the end of a financial year is subject to full external audit. The disclosure statement prepared as at the half year is subject to a limited review by an external auditor, although a registered bank may elect to obtain a full external audit.

The disclosure statements required by this Order in Council must be signed by all the directors of the bank. A director may authorise in writing another person to sign on his or her behalf.

The Reserve Bank of New Zealand Act provides for criminal and civil penalties where a bank’s disclosure statement is found to be false or misleading.