Join our daily newsletter At The Bell to receive exclusive market insights
- ANZ is one of many big banks that have had to make changes in capital to address new regulations imposed by the Reserve Bank of New Zealand (RBNZ)
- The RBNZ called to action in addressing the possibility of a financial crisis — gathering retail banks to hold roughly $20 billion in capital
- “More capital in the banking system better enables banks to weather economic volatility and maintain good, long-term, customer outcomes,” RBNZ Governor Adrian Orr said on Thursday
- ANZ entered a trading halt to address a restructure of plans — causing shareholders to worry of an impending capital raising
- Instead, shares in the bank gained 2.11 per cent after ANZ outlined a plan moving forward — with no capital raising in sight
Investors in ANZ can sing a sigh of relief after the bank ruled out a capital raising to meet new safety regulations in New Zealand.
ANZ sent itself into a trading halt on Thursday and quickly re-emerged after detailing a response to the Reserve Bank of New Zealand’s (RBNZ) new requirements.
The RBNZ ordered retail banks to hold roughly $20 billion in capital. The initiative was put in place to create a better security net in case of a country-wide emergency — such as a financial crisis.
At the forefront of changes were Australian banks, ANZ, ASB, NBZ, and Westpac, having to raise held capital in loans from 10.5 per cent, to 18 per cent.
Image sourced from Youtube
The ANZ plan of action
From the desk of ANZ management, the big bank eased investor concerns with a business outline going forward. ANZ says net impact from policies will increase “Common Equity Tier 1” capital by roughly AU$3 billion by July 2027.
As well, a $1 billion management buffer will be instated.
“Today’s announcement provides the certainty required to prepare our business for the future,” ANZ Chief Executive Shayne Elliott said on Thursday.
“While the increased capital requirements remain significant, the consultation was thorough and the concerns of industry were given a fair hearing.”
Share prices in ANZ jumped over two per cent since emerging from the trading halt.
“We remain aligned with the RBNZ’s objective to ensure a sound and efficient financial system in New Zealand,” Shayne added.
“Given the extended transition period and our strong capital position, we are confident we can meet the higher requirements without the need to raise additional capital.”
Speaking to the media and public today, representatives of the RBNZ answered queries.
“More capital [reduces] the likelihood of a bank failure,” RBNZ Governor Adrian Orr said.
“More capital in the banking system better enables banks to weather economic volatility and maintain good, long-term, customer outcomes.”
Since ANZ came out of its trading halt, shares in the bank gained 2.11 per cent on the Australian market — trading for $24.70 each.
