RBNZ announces final capital requirements

ASB Bank Limited (ASB) today notes the release by the Reserve Bank of New Zealand (RBNZ) on the final capital requirements applicable to banks in New Zealand. RBNZ has confirmed that, the risk-weighted assets (RWA) of internal ratings based banks such as ASB, will increase to approximately 90% of that required under a standardised approach. In addition, for those banks deemed systemically important (including ASB), the Tier 1 capital requirement will increase to 16% of RWA, 13.5% of which must be in the form of Common Equity Tier 1 (CET1) capital. RBNZ has announced that Tier 2 capital will remain in the framework, and can comprise 2% of the minimum Total Capital ratio of 18%. The RBNZ has confirmed that redeemable perpetual preference shares that are issued by banks will be eligible to qualify as Additional Tier 1. Existing Additional Tier 1 and Tier 2 contingent instruments issued by New Zealand banks will no longer be eligible under RBNZ's new capital criteria and phased out over the transition period. RBNZ has announced a 7-year transition period for banks to meet the new requirements, starting from 1 July 2020. Based on ASB's current balance sheet size and composition, we will require an additional ~NZ$3bn in Tier 1 capital (of which ~NZ$2.5bn must be in CET1 capital) by 1 July 2027. Our ultimate parent company, Commonwealth Bank of Australia (CBA) has indicated through an ASX announcement, that it is well-positioned to manage the new capital requirements. CBA's announcement is available on www.asx.com.au. Further information on the RBNZ's final capital requirements are available at www.rbnz.govt.nz. ___ ENDS Released by: Rachel Martin, Secretariat, ASB Bank Limited asbsecretariat@asb.co.nz For enquiries, contact: Chandu Bhindi, General Manager Treasury, ASB Bank Limited Ph: 09 337 4371 funding@asb.co.nz End CA:00345517 For:ABB Type:GENERAL Time:2019-12-05 14:59:04