New credit rating regime for deposit-takers begins
From today credit ratings are now mandatory for non-bank deposit takers (NBDTs) under new Reserve Bank rules.Mandatory credit ratings are a key component of the new prudential regulatory regime for deposit taking finance companies, building societies and
NBR staff
Mon, 01 Mar 2010
From today credit ratings are now mandatory for non-bank deposit takers (NBDTs) under new Reserve Bank rules.
Mandatory credit ratings are a key component of the new prudential regulatory regime for deposit taking finance companies, building societies and credit unions.
The regime also includes capital adequacy requirements, restrictions on lending to related parties, governance and risk management requirements.
Reserve Bank Governor Alan Bollard said credit ratings from approved rating agencies play an important role in the new regulatory regime.
“Credit ratings are useful as they assist investors to compare the relative riskiness of deposit taking institutions when they decide where to invest their funds.”
Last Friday the Securities Commission issued interim guidance on the disclosure requirements for companies under the new regime (the Ministry of Social Development has yet to complete the regulations).
It recommended including information about credit ratings in all advertising (where possible), particularly if the advertising features information about promised rates of return.
However, companies will not be allowed to show credit ratings from ratings agencies that aren’t approved by the Reserve Bank.
Not all deposit takers will have credit ratings as some may be exempted from the requirement by the Reserve Bank.
For example, NBDTs with less than $20m of consolidated liabilities are able to operate with an exemption from the credit rating requirement provided the Reserve Bank has been notified in advance.
NBR staff
Mon, 01 Mar 2010
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