The Reserve Bank has released a consultation document entitled
Review of Disclosure Requirements for Registered Banks (the
options to change the disclosure requirements for registered
banks . The Review asks questions, with submissions due by
24 September 2010. The results of the Review are
to be published in November 2010, with the new disclosure regime
expected to come into effect on 31 March 2011.
The Review aims to reduce compliance costs as well as making
disclosure more meaningful. It notes that New Zealand has more
disclosure onerous obligations than the UK and Australia (they have
no off-quarter reporting and less detail in their half year
reporting). Its starting point is that there is some overlap
between the Reserve Bank's disclosure requirements and those
required under the Financial Reporting Act and the Basel Committee
on Banking Supervision. The Review contains an 'acid test',
which asks 'what extra benefit do the Reserve Bank's
disclosure requirements give on top of what is already
The Review discusses several options, but details two
New Key Investment Summary, modified General Disclosure
Modified General Disclosure
New Key Investment Summary, streamlined General Disclosure
Streamlined General Disclosure
New Key Investment Summary
Brief General Disclosure Statement (a
variation is to dispense with this altogether)
Disclosure reports are relevant to a number of parties,
including banks themselves, auditors, consumer groups, the
Securities Commission and MED, ratings agencies and financial
commentators. These parties have disparate interests. The crux of
the preferred options is to have a disclosure regime that is useful
to all and cost effective to the banks. To this end, both preferred
options change the status quo in the following ways:
both seek to modify the General Disclosure Summary (GDS) to
make it consistent with NZ IFRS
both options would streamline the half year GDS, removing some
of the full year NZ IFRS requirements that are not necessary half
yearly. These include full disclosure of accounting policies, risk
management policies, detailed notes on tax expense, deferred tax,
bonds and notes etc. This would reduce compliance cost, result in a
less voluminous disclosure and align it with international
both options entail cutting the Supplemental Disclosure
Document (SDS), a document reserved for legal documents such as
The primary difference between the options is that Option A
still envisages retail customers' scrutiny through the Key
Investment Summary (KIS). However, the Review recognises that
retail customers are far more likely to respond to commentary or to
use a financial website to find information than to seek out a KIS
(and as a consequence there is the impression that no-one uses a
KIS), and that an off-quarter document that tries to be accessible
enough for general as well as providing enough information for
experts is likely to end up achieving neither. As such, the Reserve
Bank prefers Option B.
Other changes the Review proposes:
a reduction in the period in which to issue the half yearly GDS
to two months after the end of the half year (to bring it into line
with the off quarters GDS time frame) – currently it is
three months (as per the annual GDS time frame) – on the
basis that there will be reduced disclosure requirements, and
improved accessibility to the GDSs on Banks' websites
– there are concerns that they are not as accessible as
they could be. The requirement for hard copies of the GDS to be in
branches would be dropped – hard copies would need to be
available on request from the head office only.
The RBNZ is giving further consideration to the level of private
reporting to RBNZ by Banks in light of the changes to the public
The remainder of the Review asks a number of technical questions
around accounting treatment and disclosure arising out of a line by
line review of the current GDS disclosure requirements.
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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