RBNZ gives banks seven years to increase capital buffers
RBNZ will go ahead with plans to force banks to raise capital ratios
- Large banks will have to hold 18% in total capital (and 16% in tier one capital) versus current 10.5% minim
- Smaller banks will have to hold 14% in tier one capital
This sounds steep but the average level of capital currently held by New Zealand banks is 14.1% so there's time. The window was also stretched to 7 years from 5 initially.
The kiwi likes this news with a quick 20 pip jump.