The Reserve Bank will hold another round of talks with the banking sector after lenders pushed back on the detail of its proposed 'dashboard' regime for making their financial information available outside of half-year and annual updates.
In September, the central bank proposed an online dashboard presenting information on licensed banks' credit ratings, capital levels, asset quality, financial performance, and liquidity, and was considering whether to add details of large exposures and loan-to-value ratios. It had planned to make a final policy decision in the first quarter of this year, but today said it will continue to engage with stakeholders after some concerns were raised about the proposal with a final decision likely to be in the middle of the year and the possibility of a phased-in implementation.
"After carefully reviewing all feedback, the Reserve Bank considers that the concerns raised about the dashboard proposal should be able to be addressed, and the dashboard remains the bank's preferred option to enhance market discipline by increasing the effectiveness of the bank disclosure regime," deputy governor Grant Spencer said. "The bank will further engage with submitters and stakeholders in the coming months, to discuss possible refinements to the dashboard concept and the issues raised during consultation."
A principal objection raised by the banks in submissions to the regime was over the proposed liquidity metrics, which track a lenders' funds coming in against those going out. The chief issue was that those flows were a moving feast, and taking them at a point in time wouldn't accurately show a bank's risk profile and could scare unsophisticated retail investors into thinking a lender's position was more parlous than the reality.
Irrespective of where the RBNZ fell, the banks, through their industry lobby the New Zealand Bankers' Association, sought another round of consultation "to work out the detail of the disclosures required, in particular to ensure that the disclosures are comparable between banks with different structures, and to address any other issues that will likely arise."
The dashboard proposal came up from earlier consultation on whether to ditch banks' quarterly disclosure statements altogether, which banks complained were of little value to those who read them and an unnecessary cost. The Reserve Bank didn't agree and decided to retain them to maintain adequate market discipline, with the $100,000 cost not deemed to be overly burdensome.
The Reserve Bank is redeveloping its balance sheet for private statistical reporting, which means the introduction of a dashboard couldn't be implemented until the first half of next year when the project is completed.