NEW ZEALAND GAZETTE, No. 35

11 FEBRUARY 2005

• include additional disclosures related to corporate governance matters;
• modify the disclosure of information about impaired assets, concentrations of credit exposures to individual counterparties, and exposures to connected persons.

It also revises some other disclosure requirements of the previous Order 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 information about credit ratings the bank is required to have, and a disclosure of the current level of each such 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 or full year and peak over the most recent quarter of the accounting period to date, on exposure concentrations to individual counterparties and groups of closely related counterparties and to connected persons;

f market risk information, both as at the end of the half year or full year and peak over the most recent quarter of the accounting period to date, 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 banking group’s equity;

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

h statements signed by the directors of the bank, including an attestation as to whether the directors are satisfied that the banking group had systems in place to monitor and control adequately 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;

i information on the banking group’s funds management and securitisation activities, and the marketing and distribution of insurance products, to the extent it has any;

j 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, 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 registered bank are guaranteed;

c where the registered 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 a copy of any bilateral netting agreement the bank has entered into with a connected person.

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. 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 whether the information disclosed complies with the provisions of this Order for determining and disclosing that information.

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.

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