The Reserve Bank of New Zealand (RBNZ) announced today that the four major banks in the country have met the requirements of its outsourcing policy, which aims to ensure the resilience and stability of the banking system.
What is the outsourcing policy?
The outsourcing policy is a set of rules that the RBNZ imposes on registered banks that have a significant share of the banking system’s assets, liabilities, or payment systems. These banks are currently ANZ Bank New Zealand Limited, ASB Bank Limited, Bank of New Zealand, and Westpac New Zealand Limited. The policy requires these banks to have the ability to control and execute their core functions and services in New Zealand, without relying on external parties, in the event of a crisis or disruption.
The policy was introduced in 2006, following the collapse of a major Australian bank’s IT system, which affected its New Zealand subsidiary. The policy was revised in 2017, after a comprehensive review by the RBNZ, to address the changes in the banking environment and the feedback from the stakeholders.
How did the banks comply with the policy?
The four major banks had to submit their outsourcing plans to the RBNZ by October 2020, detailing how they would comply with the policy by October 2022. The plans had to cover various aspects of the banks’ operations, such as IT systems, payment services, liquidity management, risk management, and governance.
The RBNZ assessed the plans and engaged with the banks to ensure that they met the policy objectives and expectations. The RBNZ also conducted on-site visits and audits to verify the banks’ progress and readiness.
The RBNZ confirmed today that the four major banks have successfully implemented their outsourcing plans and achieved compliance with the policy. The RBNZ commended the banks for their efforts and cooperation, especially amid the challenges posed by the COVID-19 pandemic.
What are the benefits of the policy?
The RBNZ stated that the outsourcing policy is an important part of its prudential framework, which aims to promote a sound and efficient financial system in New Zealand. The policy enhances the resilience and stability of the banking system, by reducing the risks and impacts of a failure or disruption of a major bank or its service provider.
The policy also supports the RBNZ’s statutory mandate to maintain financial stability, by ensuring that the RBNZ has the necessary tools and information to effectively supervise and resolve a distressed bank, if needed.
The policy also benefits the customers and the wider economy, by increasing the confidence and trust in the banking system, and by minimizing the potential costs and losses that could arise from a banking crisis.
Disclaimer
This article was generated by an artificial intelligence system, using the information from the following sources:
- Major banks compliant with RBNZ Outsourcing Policy – Reserve Bank of New Zealand – Te Pūtea Matua
- Browse Issues: The National tribune. [volume] – Chronicling America
- The National Tribune archives – The Online Books Page
The article does not reflect the views or opinions of the artificial intelligence system, the sources, or the Reserve Bank of New Zealand. The article is not intended to provide any financial, legal, or professional advice. The readers are advised to verify the facts and information from the original sources before making any decisions based on the article.
