NZ banks given seven years to raise capital buffers

WELLINGTON: New Zealand will require banks to increase capital by NZ$20bil (US$13 bil) to better withstand economic shocks, but extended the time they have to build up their buffers.

The nation’s largest lenders will have seven years to raise their high-quality Tier-1 capital to 16% of risk-weighted assets, the Reserve Bank said here yeseterday, up from the five years initially mooted. In another concession, some of the extra capital can be met by redeemable preference shares, which it says will be provide a more cost-effective funding option.