New Zealand Legislation: Regulations
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Pursuant to section 157G of the Reserve Bank of New Zealand Act 1989, the Reserve Bank of New Zealand gives the following notice (to which is appended a statement of reasons of the Bank).
This notice is the Deposit Takers (Credit Ratings Minimum Threshold) Exemption Notice 2009.
This notice comes into force on the day after the date of its notification in the Gazette.
This notice expires on the close of 1 March 2013.
This notice applies to the years beginning on 1 March 2010, 1 March 2011, and 1 March 2012.
(1) In this notice, unless the context otherwise requires,—
Act means the Reserve Bank of New Zealand Act 1989
advertisement has the same meaning as in section 2A of the Securities Act 1978
generally accepted accounting practice has the same meaning as in section 3 of the Financial Reporting Act 1993
investment statement has the same meaning as in section 38C of the Securities Act 1978
liabilities does not include contingent liabilities
measurement date means,—
(a) for the year beginning on 1 March 2010, 1 October 2009; and
(b) for the year beginning on 1 March 2011, 1 October 2010; and
(c) for the year beginning on 1 March 2012, 1 October 2011
notification date means,—
(a) for the year beginning on 1 March 2010, 26 February 2010; and
(b) for the year beginning on 1 March 2011, 28 February 2011; and
(c) for the year beginning on 1 March 2012, 29 February 2012
registered prospectus has the same meaning as in section 2(1) of the Securities Act 1978
year means a period of 12 months beginning on 1 March and ending with the close of the last day of February.
(2) Any term or expression that is defined in the Act and used, but not defined, in this notice has the same meaning as in the Act.
(3) The example used in clause 6(2) is only illustrative of that provision and does not limit it. If the example and that provision are inconsistent, the provision prevails.
(1) Every deposit taker is exempted from section 157I of the Act in respect of a year if—
(a) the consolidated liabilities of the borrowing group as at the measurement date for that year, calculated in accordance with subclause (2), are less than $20 million; and
(b) on or before the notification date for that year, the deposit taker provides the Bank with a written statement, signed by all directors of the deposit taker, setting out the following:
(i) a statement that, according to the deposit taker's assessment, it meets the requirements of the exemption (including the requirement in paragraph (a)):
(ii) the figures that the deposit taker relies on in support of that assessment:
(iii) a statement that the deposit taker will be operating on the basis of the exemption for that year.
(2) The consolidated liabilities of the borrowing group as at the measurement date must be calculated, in accordance with all measurement and recognition requirements under generally accepted accounting practice, using the following formula:
| Σx | ||
| 12 |
where—
Example
The consolidated liabilities of deposit taker A's borrowing group (excluding liabilities between members of the borrowing group), as at the end of each of the 12 months preceding 1 October 2009, are—
| 30 September 2009 | 24 million | |
| 31 August 2009 | 23.5 million | |
| 31 July 2009 | 22 million | |
| 30 June 2009 | 20 million | |
| 31 May 2009 | 21 million | |
| 30 April 2009 | 19 million | |
| 31 March 2009 | 20 million | |
| 28 February 2009 | 18 million | |
| 31 January 2009 | 17 million | |
| 31 December 2008 | 18 million | |
| 30 November 2008 | 19 million | |
| 31 October 2008 | 18 million |
| 24+23.5+22+20+21+19+20+18+17+18+19+18 | = 19.9583 | ||
| 12 |
The consolidated liabilities of deposit taker A's borrowing group as at the measurement date for the year 1 March 2010 to 28 February 2011 are therefore less than $20 million for the purposes of subclause (1)(a).
(3) If a deposit taker does not have any guaranteeing subsidiaries, the reference in this clause to the consolidated liabilities of the borrowing group must be treated as a reference to the liabilities of the deposit taker.
The exemption in clause 6 is subject to the conditions that—
(a) the deposit taker must prominently state in every registered prospectus, investment statement, and advertisement relating to an offer of its debt securities that the creditworthiness of the deposit taker is not rated by a rating agency approved by the Bank under section 157J of the Act; and
(b) the deposit taker must, in every registered prospectus, and every investment statement under the section headed “What are my risks?”, relating to an offer of its debt securities, prominently—
(i) disclose that it is not rated because it is operating under an exemption from the requirement under the Act to have a credit rating; and
(ii) describe the general nature and effect of the exemption; and
(iii) disclose that the exemption applies because the deposit taker and its borrowing group has liabilities of less than $20 million, making it unduly onerous and burdensome to comply with the requirement under the Act to have a credit rating; and
(c) the deposit taker must not disclose, in any registered prospectus, investment statement, or advertisement relating to an offer of its debt securities, an assessment of its creditworthiness that is in substance a credit rating (whether called a rating, grading, scoring, ranking, or by any other name) issued by an agency that is not approved by the Bank under section 157J of the Act.
Dated at Wellington this 29th day of July 2009.
Grant Spencer,
Deputy Governor.
This notice comes into force on the day after the date of its notification in the Gazette and expires on 1 March 2013. It exempts entities that are deposit takers for the purposes of Part 5D of the Reserve Bank of New Zealand Act 1989 (the Act) from the requirement to have a credit rating under section 157I of the Act if—
the consolidated liabilities of the borrowing group, or in the case of a deposit taker that is not part of a borrowing group, the liabilities of the deposit taker, are less than $20 million (measured as an average over a specified 12-month period); and
the deposit taker meets certain requirements concerning notification to the Reserve Bank of New Zealand of its intention to operate on the basis of the exemption.
The exemption is subject to conditions.
The Reserve Bank of New Zealand, after taking into account the principles set out in section 157F of the Act, considers it is appropriate to grant the exemption because—
the Bank is satisfied that the exemption is consistent with the maintenance of a sound and efficient financial system in that the liabilities of the exempted entities represent a very small percentage of the total liabilities of the deposit taking sector:
the additional direct and indirect costs of obtaining a credit rating are unduly onerous and burdensome when compared with the balance sheet size and average profitability of the exempted deposit takers:
the benefits of the exemption are that unnecessary compliance costs are avoided and potential barriers to entry are removed, therefore maintaining competition in the deposit taking sector. These benefits outweigh the costs of inconsistent treatment between small and larger deposit takers and the loss of information to investors:
the conditions of the exemption imposing disclosure requirements on exempted deposit takers manage the risk posed by the absence of a credit rating, including any risk of the public being misled by the disclosure of ratings from a non-approved agency, and therefore the extent of the exemption is not broader than what is reasonably necessary to address the matters that gave rise to the exemption.
Date of notification in Gazette: 6 August 2009.
This notice is administered by the Reserve Bank of New Zealand.
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