Late last year, the Reserve Bank of New Zealand (REINZ) announced plans to increase tier one capital requirements for all systematically important banks to 16% of risk weighted assets, up from 13.5%.
New Zealand’s big four Australian-owned banks were, therefore, placed directly in the REINZ’s cross-hairs given they comprise nearly 90% of the nation’s banking assets.
On Wednesday, the RBNZ ordered Westpac NZ to lift its holding of liquid assets after being in breach of liquidity requirements for eight years.
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Now Westpac is reviewing ownership of its New Zealand subsidiary, with an eye to possibly spinning-off or selling the organisation:
Westpac NZ is considered a systematically important bank, and told shareholders in November that it would need another $NZ1.6 billion to $NZ2.2 billion in capital to get meet the regulatory requirements by 2028.
If Westpac was to divest its New Zealand subsidiary, it would represent the first ownership change at a major NZ bank since 2003 when ANZ purchased the National Bank from Lloyds TSB around $NZ5.5 billion.
In turn, Australia’s oligopoly choke hold on New Zealand’s banking system might finally be broken.