Independent review into ANZ capital models commences

by Ksenia Stepanova24 Jun 2019

ANZ New Zealand has announced that it will work with the Reserve Bank of New Zealand (RBNZ) on an independent review of its capital models and attestation process, following the revocation of its approval to model its own operational risk and capital requirements earlier in May.

ANZ will cooperate with the Reserve Bank under section 95 of the RBNZ Act, and will commission an independent third party to look at its compliance with capital adequacy requirements, and its Directors’ attestation and assurance framework. According to Board Chair Sir John Key, discussions are currently underway with the Reserve Bank to move the review forward.

ANZ is now required to use the standardised approach for calculating operational risk capital, which has increased its minimum capital held by approximately 60%. The Reserve Bank highlighted a “persistent failure in controls and attestation processes” in May, and found that an approved model had not been used since 2014.

“The Board has been working on commencing an independent review to provide assurance that our capital models and the Directors’ attestation processes are robust, and operating in a prudent manner,” Key stated.

“Following discussions with the RBNZ, the Directors agree that the best way to achieve this assurance is working with the RBNZ and an independent party to undertake the necessary reviews.”

“As has been the case with independent reviews of other financial institutions’ processes, we agree that the most effective way of achieving this assurance is via the independent report powers given to the RBNZ under section 95 of the RBNZ Act,” Key added.

ANZ New Zealand says it continues to be “sound and well capitalised with strong credit ratings,” holding over $12.4 billion of capital as of 31 March 2019.

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