4418 NEW ZEALAND GAZETTE No. 135

(a) trust, custodial, funds management, and other fiduciary activities established, marketed, and/or sponsored by a member of the Banking Group; and

(b) the origination of securitised assets, and in the marketing or servicing of securitisation schemes.

4. Where applicable, a statement as to whether arrangements have been put in place to ensure that difficulties arising from the activities specified in clause 3 of this Schedule would not impact adversely on the Banking Group, and if so, the nature of those arrangements.

5. Where applicable, a statement of the amount represented by the activities specified in clause 3 of this Schedule, disclosed according to the nature of the activity.

Sixth Schedule

Risk Management Policies

1. In respect of the Banking Group, for each of the following categories of risk:

   (a) Credit Risk, including concentrations of Credit Risk, intra-day Credit Risk, Credit Risk to Bank Counterparties and related party Credit Risk;

   (b) Currency Risk;

   (c) Interest Rate Risk;

   (d) Equity Risk;

   (e) Liquidity risk;

   (f) any other Material business risk to which the Banking Group is exposed;

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, Overseas 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 a country other than New Zealand and which operates in New Zealand as a branch of the overseas bank, 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 at 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, both as at the end of the half year or 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;

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

f 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;

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

h information on the directorship and auditors of the bank.

Each bank must also 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