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Bank Of New Zealand Receives Advanced Basel Ii Accreditation

Fuseworks Media
Fuseworks Media
Bank Of New Zealand Receives Advanced Basel Ii Accreditation

Bank of New Zealand has been advised by the Reserve Bank of New Zealand (`RBNZ') that it has received Advanced Accreditation under the Basel II Internal Ratings Based approach for credit risk, from 1 July 2008. Accreditation of the Bank's parent company, the National Australia Bank Group, has also been confirmed by the Australian Prudential Regulation Authority (`APRA'), for its Australian, New Zealand and nabCapital operations. Accreditation for operational risk, under the advanced measurement approach (`AMA'), was previously granted by RBNZ and APRA from 1 January 2008.

Accreditation by RBNZ means that in determining its capital position Bank of New Zealand will now use the most advanced internal-ratings based approach (`IRB') for assessing credit risk and AMA for operational risk. Additionally, Bank of New Zealand will use the RBNZ's prescribed standardised approach for assessing market risk.

Bank of New Zealand Chief Executive Officer, Cameron Clyne, said that Basel II accreditation represented a major accomplishment and was particularly pleasing given the significant investment the Bank had made in its risk management framework and infrastructure.

``Basel II accreditation is an acknowledgement of the enhanced sophistication of both our risk management processes and the methodologies which determine regulatory capital requirements.''

Details of Bank of New Zealand's capital position under Basel II will be reflected in the full year to 30 September 2008 results announcement, and will also be reflected in the Bank's General Disclosure Statement for the full year - which will also be posted on the Bank's website, ENDS Notes to Editors:

The Basel II Capital Adequacy Framework sets out minimum capital measurement standards within a framework for the regulation governing the capital adequacy of internationally active banks. It replaces the existing regulatory requirements that have been in place since 1988 (known as Basel I). Basel II has significantly more risk sensitive capital requirements than the previous Basel I requirements, with greater use of assessments of risk by banks' internal systems as inputs to capital calculations.

The Basel II Framework provides a range of options for determining the capital requirements for the significant risks within a financial institution to allow banks and supervisors to select approaches that are most appropriate for their operations and their financial market infrastructure.

In achieving this goal, Bank of New Zealand is joining a very select group of banks internationally who have to date achieved advanced accreditation for both credit and operational risk.

For Bank of New Zealand, Basel II is not just about meeting the technical requirements of the framework, but also about the application of sound risk management to meet the framework's objective of stronger risk management practices as a major benefit for internationally active banks. Effective processes and systems support our sound risk management principles, providing a platform for sustainable revenue growth, improved customer service and appropriate shareholder returns.

As a requirement of its advanced Basel II accreditation, Bank of New Zealand must publicly disclose defined risk and capital information. Our first full market disclosure will be released in the Bank's General Disclosure Statement for the full year ending 30 September 2008.

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