23 FEBRUARY 2007

NEW ZEALAND GAZETTE, No. 21

463

(4) For the purposes of clause 9(1) of this Schedule, Financial Instruments which have been issued by associates of the Registered Bank or which have been included in the Capital of the Banking Group shall not be included in the calculation of the Banking Group’s Foreign Currency Exposure.

10. Aggregate Foreign Currency Exposure—A Banking Group’s Aggregate Foreign Currency Exposure is the absolute value of the greater of the sum of any positive Foreign Currency Exposures and the sum of any negative Foreign Currency Exposures.

11. Aggregate Equity Exposure—The Registered Bank shall derive the amount of its Aggregate Equity Exposure in accordance with either:

(a) clauses 12 and 13 of this Schedule; or

(b) any other method, but only if the Aggregate Equity Exposure derived in accordance with that method is not, in the opinion of the Registered Bank (such opinion to be based on reasonable grounds), Materially lower than the amount derived pursuant to clause 11(a) of this Schedule.

12. Equity Exposure in a Single Currency—(1) Subject to clauses 12(2) and 12(3) of this Schedule a Banking Group’s Equity Exposure in a single currency is derived by:

(a) subtracting the aggregate amount of the value of all of the equity instruments (whether recognised or unrecognised) of the Banking Group in that currency that are Financial Liabilities from the aggregate amount of the value of all the equity instruments (whether recognised or unrecognised) of the Banking Group in that currency that are Financial Assets; and

(b) multiplying the amount derived in clause 12(a) of this Schedule by 0.08.

(2) Notwithstanding clause 12(1) of this Schedule, the value of equity instruments issued by associates of the Registered Bank shall not be included in the calculation of the Banking Group’s Equity Exposure.

(3) Subject to clause 12(4) of this Schedule, the value of an equity instrument is:

(a) in the case of an unrecognised equity instrument and a recognised equity instrument which is a market related contract, the face or contract amount of the equity instrument expressed in New Zealand dollars using the relevant spot exchange rate; and

(b) in the case of other equity instruments, the carrying amount of the equity instrument expressed in New Zealand dollars using the relevant spot exchange rate.

(4) Notwithstanding clause 12(3) of this Schedule, the value of:

(a) a net equity futures position is the marked-to-market value of the notional underlying equity position; and

(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 New Zealand, in respect of each such bank’s “off-quarters” (i.e. the first and third quarters of the bank’s financial year). It replaces the Registered Bank Disclosure Statement (Off-Quarter—New Zealand Incorporated Registered Banks) Order 2005, and comes into force on 30 March 2007.

The principal amendments to the 2005 Order included in this 2007 Order are to provide for the fact that Registered Banks will be required to adopt New Zealand equivalents of international financial reporting standards and New Zealand equivalents of international accounting standards for accounting periods starting on or after 1 January 2007. Registered Banks have had the option of adopting these international standards early, over the period 1 January 2005 to 31 December 2006, but will be required by Accounting Standards Review Board requirements to adopt them for accounting periods starting on or after 1 January 2007. The existing disclosure requirements were amended in March 2005 to handle the early adoption option but those amendments will no longer be effective once the international standards are mandatory.

The three reporting dates end-March, end-June and end-September 2007 represent a transitional period during which registered banks will be reporting on a mixture of accounting standards. The first date on which all banks will be reporting subject to international standards will be 31 December 2007. As a result, some minor amendments are needed to the disclosure requirements to ensure that they contain the appropriate definitions and cross-references for banks on all combinations of reporting standards, for reporting dates beginning with 31 March 2007. The amendments are largely mechanical. They add references to new accounting standards. Some new definitions have been added and others have cross references to the new standards.

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 Short Form 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 Short Form Disclosure Statement is required to contain a range of financial and corporate information on the bank and its banking group. The General Short Form 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 Short Form Disclosure Statement includes: