4 MARCH

NEW ZEALAND GAZETTE

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 amend the public disclosure requirements for registered banks contained in the principal Orders, which took effect on 1 January 1996. The principal Orders are amended by:

1. the inclusion of schedules specifying market risk disclosure requirements, and
2. a number of miscellaneous amendments to the general disclosure requirements.

This Order in Council comes into force on 1 April 1996. The market risk disclosures apply in respect of Disclosure Statements relating to balance dates which occur after 1 April 1996. Where a registered bank is unable to disclose peak exposures for that part of an accounting period which precedes the date on which the Order comes into force, the registered bank may disclose peak information in respect of the period commencing with the date on which this Order comes into force.

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

Market Risk Disclosure Requirements

A registered bank will be required to include market risk information in its General Disclosure Statement.

The market risk information to be disclosed will relate to the banking group’s interest rate exposure, foreign currency exposure and equity exposure. A bank will be required to disclose its exposure to each of these categories of market risk, as an amount and as a percentage of the banking group’s equity. These disclosures will be required in respect of exposures as at the end of the half year or full year and peak exposures over the accounting period to date.

The Order requires a bank to calculate market risk exposures using either the method specified in the Order, or a different method provided that such method does not give a result which would be materially lower than that arrived at by the method specified in the Order.

Miscellaneous Amendments

In addition, the Order in Council amends the principal Order:

• to make provision for the Reserve Bank to require a newly registered bank to publish an initial disclosure statement, so that there is no lag between the time the bank commences business and the time a disclosure statement is made available to its customers;
• by modifying the disclosure requirements relating to large exposures. This modification makes it clear that, when banks disclose the number of individual counterparties or counterparty groups to which they have a large exposure, they should not include in the total, those individual counterparties which are part of a counterparty group already included in the total. This will ensure that there is no double counting of exposures.

This Order in Council is administered in the Reserve Bank of New Zealand.

REGISTERED BANK DISCLOSURE STATEMENT (Off-Quarter—New Zealand Incorporated Registered Banks) Amendment Order 1996

CATHERINE A. TIZARD, Governor-General

ORDER IN COUNCIL

At Wellington this 26th day of February 1996

Present:
HER EXCELLENCY THE GOVERNOR-GENERAL IN COUNCIL

Pursuant to section 81 (1) of the Reserve Bank of New Zealand Act 1989, Her Excellency the Governor-General, acting by and with the advice and consent of the Executive Council, and on the advice of the Minister of Finance given in accordance with a recommendation of the Reserve Bank of New Zealand, hereby makes the following Order.

Analysis

1. Title, Application and Commencement
2. Interpretation
3. Schedules
4. Miscellaneous Amendments to Order in Council

An Order to amend the Registered Bank Disclosure Statement (Off-Quarter—New Zealand Incorporated Registered Banks) Order 1995.

1. Title, Application and Commencement—(1) This Order may be cited as the Registered Bank Disclosure Statement (Off-Quarter—New Zealand Incorporated Registered Banks) Amendment Order 1996, and shall be read together with and deemed part of the Registered Bank Disclosure Statement (Off-Quarter—New Zealand Incorporated Registered Banks) Order 1995 (hereinafter referred to as the principal Order).

(2) (a) This Order shall come into force on the 1st day of April 1996.

(b) Clauses 2 and 3 of the Order shall apply only in respect of Short Form Disclosure Statements relating to Off Quarter Balance Dates which occur after 1 April 1996.

(c) Where a Registered Bank is unable to disclose peak end-of-day information for that part of an Accounting Period which precedes the date on which this Order comes into force, the Registered Bank may disclose peak end-of-day information in respect of the period commencing with the date on which this Order comes into force.

2. Interpretation—Clause 2 (4) of the principal Order is hereby amended by inserting, in the appropriate alphabetical order, the following definitions:

“Aggregate Equity Exposure means the aggregate amount of Equity Exposure to all currencies.

Aggregate Foreign Currency Exposure means the aggregate amount of Foreign Currency Exposure to all currencies other than New Zealand dollars.

Aggregate Interest Rate Exposure means the aggregate amount of Interest Rate Exposure to all currencies.

Aggregate Market Risk Exposure means exposure to all, or any, of Aggregate Equity Exposure, Aggregate Foreign Currency Exposure and Aggregate Interest Rate Exposure.

Equity Exposure means the amount of the change in the economic value of equity instruments that are Financial Assets and Financial Liabilities of the Banking Group in a single currency, which would occur as a result of a change in the price of equity instruments in that currency.

Foreign Currency Exposure means the amount of the change in the economic value of the Financial Assets and Financial Liabilities of the Banking Group in a