Review of disclosure requirements for registered banks

The Reserve Bank of New Zealand (RBNZ) has released a consultation document seeking submissions on its proposals to change the current disclosure regime for registered banks, which was first put in place in 1996.

The stated aim of the review is to reduce compliance costs associated with the current disclosure requirements, while at the same time better matching the needs of the key stakeholders. The outcome is expected to be a significant modification, and reduction, in the Reserve Bank's disclosure requirements.

With a view to this aim, the RBNZ has developed the following "acid test" as an aid to its analysis of the disclosure regime:

"What is the value-added or marginal benefit of an item (mandated by the disclosure Orders In Council) on top of what is already disclosed, in terms of how much it says about risk of a bank's failure to stakeholders who may exert market discipline, relative to the cost to banks of producing it?"

The two preferred options have the following features:

• The removal of duplication or slightly different definitions between the RBNZ disclosure regime and the New Zealand International Financial Reporting Standards;

• a change in the requirement for financial statements included in half-year disclosure from being prepared on the annual financial reporting standards basis, to an interim financial reporting basis; and

• the removal of the Supplemental Disclosure Statements.

The two options proposed are:

Option A

The Key Information Summary will no longer be required. Instead, banks will make disclosures in off quarters that are significantly reduced from the current off quarter short-form disclosure statements, and on a more summarised basis.

Option B

There will be a quarterly Key Information Summary, which will be revised to be more user-friendly for retail depositors. It will include the key corporate information, summarised income statement and balance sheet, key ratios, a set of useful notes and a glossary. This will be the only required disclosure in the off quarters.

Submissions close on 24 September.

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