NEW ZEALAND Law and Practice Contributed by: Deemple Budhia, Ling Yan Pang, Fred Ward and Matt Kersey, Russell McVeagh
APS 120 In addition, the “big four” New Zealand banks (ANZ Bank New Zealand Limited, ASB Bank Limited, Bank of New Zealand and Westpac New Zealand Limited) are owned by Australian parent banks. These Australian parent banks are subject to the Australian Prudential Regulation Authority’s Prudential Standard APS 120 (APS 120) in relation to securitisations. As subsidiaries of these regulated Australian parent banks, the big four New Zealand banks may be required to comply with APS 120. Covered Bonds A significant use of securitisation technology in New Zealand for registered banks is through the issuance of covered bonds. Similar to the United Kingdom, New Zealand has a legislative framework for covered bonds which provides legal certainty as to the treatment of cover pool assets in the event of an originator’s liquida - tion or statutory management. However, as this legislation was not passed until 2013, the New Zealand covered bond programmes share cer - tain key features with securitisations, namely a bankruptcy-remote SPE and true sale of the underlying assets. 4.3 Credit Risk Retention There are no specific laws or regulations in New Zealand with respect to credit risk reten - tion in relation to non-bank issuers. However, the RBNZ does impose limits on the aggregate funding registered banks can provide to non- consolidated associated SPEs under its current capital adequacy framework (see 4.6 Treatment of Securitisation in Financial Entities ). In addition, as also discussed in 4.2 General Disclosure Laws or Regulations , the big four banks may be affected by APS 120. For capital- relief securitisations, APS 120 caps the level of
holding or funding of non-senior notes issued in a securitisation or provision of other loss posi - tions or credit enhancements. 4.4 Periodic Reporting As noted in 4.2 General Disclosure Laws or Regulations , securitisations in New Zealand are structured to avoid being a regulated offer. This also means that the issuer would not be subject to the majority of statutory ongoing governance and periodic reporting requirements set out in the FMC Act. While there are no specific legislative require - ments for periodic reporting, the warehouse pro - gramme documents would usually impose such requirements. For term securitisations, periodic reporting is also provided (usually on the pay - ment dates for the notes). In addition, where an RMBS is intended to be eligible for the RBNZ’s repurchase facility, one of the ongoing requirements is to submit a monthly report to the RBNZ. For asset-backed commer - cial paper or asset-backed securities, origina - tors need to update the RBNZ regularly on the net value of the underlying asset pool and any changes to the assets in that pool. Registered banks also include disclosures about securitisations/covered bond programmes in their publicly available disclosure statements. 4.5 Activities of Rating Agencies There are no laws or regulations in New Zealand with respect to rating agencies’ securitisation activities. 4.6 Treatment of Securitisation in Financial Entities The RBNZ prudentially regulates the banking sector in New Zealand. It imposes conditions in
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