3112

NEW ZEALAND GAZETTE

No. 126

(b) a net equity option position is the delta equivalent value.

13. Aggregate Equity Exposure—The Banking Group’s Aggregate Equity Exposure is the sum of the absolute values of the Equity Exposures in each currency.

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 promulgated pursuant to section 81(1) of the Reserve Bank of New Zealand Act 1989 and 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.

The Order in Council is one of four which replace four original Orders promulgated in 1995, and amended in 1996. The 1995 Orders provided for a public disclosure regime for registered banks, and replaced prospectus requirements imposed under the Securities Act 1978 on registered banks in respect of their offers of debt securities to the public.

More specifically, this Order in Council replaces the Registered Bank Disclosure Statement (Full and Half—Year—Overseas Incorporated Registered Banks) Order 1995 and the Registered Bank Disclosure Statement (Full and Half—Year—Overseas Incorporated Registered Banks) Amendment Order 1996, and comes into force on 1 October 1998.

This Order integrates the disclosure requirements of the 1995 Order and its 1996 amendment, and aligns and cross-references them to the reporting requirements of the accounting standard FRS-33: Disclosure of Information by Financial Institutions (FRS-33 was approved by the Accounting Standards Review Board in April 1997, and came into effect for accounting periods beginning on 1 April 1997). It also revises the disclosure requirements of the previous Orders in the light of the experience gained with the disclosure regime for registered banks since its commencement in 1996.

A description of the principal provisions of the revised disclosure regime is given below.

Under the disclosure regime, all registered banks are 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 provides a brief summary of key financial information on the registered bank and its banking group, and must be made available free of charge immediately upon request. The Key Information Summary must also be displayed prominently in each bank branch and in any other customer-accessible bank premises, and made available or displayed on a bank’s internet website.

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, immediately if the request is made at a bank’s head office, or within five working days if the request is made at a bank branch or at any customer-accessible bank premises other than the 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 in respect of peak for the most recent quarter of the accounting period, on exposure concentrations to individual counterparties and groups of closely related counterparties;

e market risk information, both as at the end of the half year or full year and in respect of peak for the most recent quarter of the accounting period, on the banking group’s interest rate exposure, foreign currency exposure and equity exposure. A bank is required to disclose its exposure to each of these categories of market risk, as an amount and as a percentage of the overseas banking group’s equity;

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 have been properly applied over the reporting period, 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.

A registered bank is required 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.

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, immediately if the request is made at a bank’s head office, or within five working days if the request is made at a bank branch or at any customer-accessible bank premises other than the 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 overseas bank are guaranteed;

c where the overseas bank has entered into any material cross guaranteeing arrangements, a copy of the full guarantee contract if there is a contract which sets out, or is representative of, the rights and obligations of all the cross guarantors;

d the most recent publicly available financial statements of the overseas bank and overseas banking group of which the registered bank is part.

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 bank may elect to obtain a full external audit. With the exception of the market risk information, the audit opinions at both of these periods concern whether the information disclosed gives a true and fair view of the matters to which it relates. The audit opinion on the market risk information relates to