The Reserve Bank of New Zealand (RBNZ) has asked for two reports from the local unit of Australia and New Zealand Banking Group (ANZ) to provide assurance it was operating in a prudent manner.
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The first report will cover ANZ NZ's compliance with RBNZ's current and historic capital adequacy requirements and the second will assess the effectiveness of ANZ NZ's director's attestation and assurance framework, focusing on internal governance, risk management and internal controls.
The central bank's directive follows its decision last month to revoke ANZ's local license to calculate its own operational risk capital and raising minimum capital requirement.
ANZ said in a separate statement it would work with RBNZ to commission an independent third party to look at its compliance with capital adequacy requirements. An internal review in April revealed that ANZ was not using the operational risk model the central bank had approved.
RBNZ has already proposed raising top banks' capital ratio to 16 percent, meaning the country's top four banks, including ANZ, could collectively have to raise NZ$20 billion ($A19 billion) in new capital over the next five years, which could push up borrowing costs.
RBNZ Governor Adrian Orr said ANZ remains well capitalised, adding the review will help instill "confidence in the bank and that it is operating in a prudent manner".
ANZ New Zealand, the biggest of the four Australian-owned banks that dominate New Zealand's market, said it has NZ$12.4 billion ($A11.8 billion) of capital as at March 31, which the lender says is NZ$3.5 billion ($A3.3 billion) more than it is required to have.
Reuters / Newshub.