Banking (Prudential Supervision) Act 1989

If you need more information about this Act, please contact the administering agency: Reserve Bank of New Zealand

Version as at 1 July 2022

Coat of Arms of New Zealand

Banking (Prudential Supervision) Act 1989

Public Act
1989 No 157
Date of assent
20 December 1989
see section 1(2)

Act name: amended, on 1 July 2022, by section 298(2) of the Reserve Bank of New Zealand Act 2021 (2021 No 31).


The Parliamentary Counsel Office has made editorial and format changes to this version using the powers under subpart 2 of Part 3 of the Legislation Act 2019.

Note 4 at the end of this version provides a list of the amendments included in it.

This Act is administered by the Reserve Bank of New Zealand.


Title [Repealed]
1Title and commencement
3Interpretation of provisions relating to false or misleading information
3ATransitional, savings, and related provisions
4Act to bind the Crown
5Reserve Bank of New Zealand [Repealed]
6Branches and agencies [Repealed]
7Bank to act as central bank [Repealed]
8Function to formulate monetary policy through MPC [Repealed]
9Function to implement monetary policy [Repealed]
10Remit for MPC [Repealed]
11Other matters relating to remit [Repealed]
12Order providing for different economic objective or objectives [Repealed]
13Order must include replacement remit [Repealed]
14Effect of order on current remit [Repealed]
15Period may be extended [Repealed]
15ARevocation of order [Repealed]
15BFunctions under sections 8 and 9 not affected [Repealed]
15CRegular reports on monetary policy [Repealed]
15DLonger-term report on formulation and implementation of monetary policy [Repealed]
16Dealing in foreign exchange by Bank [Repealed]
17Power of Minister to direct Bank to deal in foreign exchange within guidelines [Repealed]
18Power of Minister to fix exchange rates for foreign exchange dealing by Bank [Repealed]
19Effect of directions on operational objectives [Repealed]
20Effect of directions on monetary policy [Repealed]
21Foreign exchange gains and losses [Repealed]
22Temporary suspension of foreign exchange business [Repealed]
23Bank to advise Minister on foreign exchange matters [Repealed]
24Foreign reserves [Repealed]
25Issue of currency by Bank [Repealed]
26Power of Bank to call in currency [Repealed]
27Legal tender [Repealed]
28Defacing bank notes [Repealed]
29Making or issuing of other bank notes or coins [Repealed]
30Reproduction or imitation of currency [Repealed]
31Bank to act as lender of last resort [Repealed]
32Bank may provide settlement account services [Repealed]
33Policy advice [Repealed]
34Government banking business [Repealed]
35Financial products registry services [Repealed]
36Bank may require financial institution to supply information [Repealed]
37Failure to supply information [Repealed]
38Requirement that information be audited [Repealed]
39Powers [Repealed]
40Governor [Repealed]
41Duties of Governor [Repealed]
42Conditions of appointment of Governor [Repealed]
43Deputy Governor [Repealed]
44Term of appointment and conditions of appointment of Deputy Governor [Repealed]
45Extension of term of Governor or Deputy Governor [Repealed]
45AValidity of appointments [Repealed]
46Disqualification of Governor and Deputy Governor [Repealed]
47Incapacity of Governor and Deputy Governor [Repealed]
48Vacancy in office of Governor [Repealed]
48ADeputy Governor may act pending appointment [Repealed]
48BVacancy in office of Deputy Governor [Repealed]
49Removal of Governor from office [Repealed]
50Removal of Deputy Governor from office by Order in Council [Repealed]
51Delegation [Repealed]
52Board of directors [Repealed]
53Duties of Board [Repealed]
53ABoard must prepare annual report [Repealed]
53BBoard must supply reports or other information to Minister [Repealed]
53CBank must supply reports or information to Board [Repealed]
54Membership of Board [Repealed]
55Term of office of non-executive directors [Repealed]
56Considerations affecting appointment of non-executive directors [Repealed]
57Extraordinary vacancies [Repealed]
58Disqualification of non-executive directors [Repealed]
59Removal from office of non-executive directors [Repealed]
59AChairperson and deputy chairperson of Board [Repealed]
60Meetings of Board [Repealed]
60ATeleconference meeting [Repealed]
60BDirectors to be notified of meetings [Repealed]
60CWho presides at meetings of Board [Repealed]
61Directors to disclose interests [Repealed]
62Committees [Repealed]
63Fees and expenses of non-executive directors [Repealed]
63AEstablishment of monetary policy committee [Repealed]
63BFunctions of MPC [Repealed]
63CMembership of MPC [Repealed]
63DCharter [Repealed]
63EContent of charter [Repealed]
63FReplacement charter [Repealed]
63GConsultation about replacement charter [Repealed]
63HPublication of charter [Repealed]
63IStatus of charter [Repealed]
63JCode of conduct [Repealed]
63KContent of code [Repealed]
63LPublication and status of code [Repealed]
63MOther matters [Repealed]
63NAppointment procedure [Repealed]
64Limit on use of restricted words in name or title
65Bank may authorise use of restricted words in name or title
66Certain persons exempt from application of section 64
66AApplication of Companies Act 1993
66BLimit on use of restricted words in advertisement
66CPower to obtain information
66DPower to require change of name, etc
66EPower to appoint person to enter and search premises
66FRequirements on entering and searching premises
66GConfidentiality of information or documents
66HLimits on further disclosure of information or documents published or disclosed under section 66G
66IProcedure for obtaining warrants
66JEffect of warrant [Repealed]
66KEffect of proceedings
66LEffect of final decision that exercise of powers under section 66E unlawful
66MPenalty for offences
67AInterpretation in this Part
67Registration and prudential supervision
68Exercise of powers under this Part
68ATrans-Tasman co-operation
68BBank to have regard to directions about government policy objectives [Repealed]
70Application for registration
71Voluntary removal of name from register
72Offence for person who is not registered bank to hold itself out to be registered bank
73Determination of applications
73AFurther matters to which Bank must have regard if applicant is overseas person
73BFurther matters to which Bank must have regard if applicant is subsidiary of overseas person
74Conditions of registration
75Publication of principles [Repealed]
76Registration of certain persons
77Cancellation of registration
77AChanges of ownership
77BEffect of section 77A on contracts, etc
78Carrying on business in prudent manner
79Annual fee [Repealed]
80Credit rating of registered banks
81Public disclosure of information or data by registered banks
81AAFurther matters that may be prescribed
81ABDisclosure statement not required to include information or data about customers or clients of registered banks
81ACDuty to supply information or data to registered bank
81ABank to consult
82Disclosure statements must be signed
83Bank may require disclosure statement to be corrected
84Interpretation [Repealed]
85Content of advertisements by registered banks [Repealed]
86Regulations [Repealed]
87Offence to advertise in contravention of regulations [Repealed]
88Bank may prohibit advertisements by registered banks [Repealed]
89Offence to fail to publish required information in disclosure statement
89AOffence to publish false or misleading disclosure statements
89BOffence to fail to make most recent disclosure statement publicly available
89COther offences in relation to disclosure statements
90Civil liability
92Fair Trading Act 1986 not affected
93Supply of information by registered banks for purposes of prudential supervision
93AScope of notice under section 93
93BCertain persons may be required to supply information to registered banks
93CSupply of information by other persons for purposes of prudential supervision
94Requirement that information, data, or forecasts be audited
95Bank may require report relating to registered banks, etc
95ABank may require report under section 95 to be published
96Disclosure of information to Bank by auditors
97Auditor to inform of intention to disclose
98Protection of auditors
98AAccess to information by home country supervisor
98BDuties of person on receipt of notice under section 98A
99Powers to obtain information and documents
100Requirements on entering and searching premises
101Investigation of affairs of registered bank
102Powers of person appointed to carry out investigation
103Offences in relation to investigations
104Requirements to be complied with by person carrying out investigation
105Confidentiality of information
106Procedure for obtaining warrants
107Effect of warrant
108Effect of proceedings
109Effect of final decision that exercise of powers under section 99 unlawful
110Effect of final decision that exercise of powers under section 101 or section 102 unlawful
111Bank may require registered bank to consult [Repealed]
112Bank may give advice and assistance [Repealed]
113Bank may give directions
113AScope of directions
113BPower to remove, replace, or appoint directors
114Offence to contravene directions
115Offence to disclose giving of direction
116Miscellaneous provisions with respect to directions and dispositions
117Statutory management of registered banks and associated persons
118Grounds on which registered bank may be declared to be subject to statutory management
119Advisory committee
120Statutory manager to comply with directions of Bank
121Considerations affecting exercise of powers by statutory manager
121AStatutory manager to avoid actions likely to have detrimental effect
122ADefinitions of terms relating to qualifying derivatives
122BMatters relating to possession or control of collateral
122CBank may reduce or extend stay on exercise of rights to enforce security interest over collateral
122DMatters Bank must be satisfied of under section 122C(3)(b)
122EPublication and status of notice under section 122C
123Statutory manager may incorporate company under Companies Act 1993 to acquire business of branch of foreign institution
124Vesting of property subject to security
125Proof of vesting
126Prohibition against removal of assets
127Statutory manager may suspend payment of money owing
128Management of registered bank to vest in statutory manager
129Powers of statutory manager
130Statutory manager empowered to carry on business of registered bank
131Statutory manager may pay creditors and compromise claims
132Sale of registered bank
133Consents not required under other Acts
134Sale of property or assets subject to a security
135Proof of transactions
136Liquidation of registered banks
137Provisions applying where liabilities included in sale
138Power to trace property improperly disposed of
139Application of certain provisions of Companies Act 1993
139BMeaning of covered bond SPV
139CMeaning of issuer
139DRegister of registered covered bond programmes
139ERequirement, and application, for registration of covered bond programme
139FDetermination of application for registration of covered bond programme
139GBank must approve or decline application
139HRequirements relating to registered covered bond programmes
139ICover pool monitor
139JLimitation on application of statutory management, etc, provisions to covered bond SPV
140Application of this Part to joint statutory managers, associated persons, and subsidiaries
141Termination of appointment of statutory manager
142Statutory manager may apply to High Court for directions
143Prior winding up, liquidation, or receivership to cease
143AContinuation of statutory management
144Termination of statutory management
145Obligations incurred by statutory manager
146Indemnity [Repealed]
147Registered bank not entitled to be informed about exercise of powers
148Expenses of statutory management
149Advances to statutory manager and members of advisory committee
150Duty to deliver books and property to statutory manager
151Offence to destroy, alter, or conceal records
152Regulations relating to powers of Bank and statutory manager
152ARegulations are confirmable instruments [Repealed]
153Application of other Acts
154Appointment of auditors
155Annual accounts
156Annual report by statutory manager
156AAPenalty for miscellaneous offences
156ABPenalty for offences relating to supply of information, etc
156ACPenalty for offences relating to registration of banks, disclosure statements, prudential supervision of registered banks, etc
156ARetention of documents by banks
156BExercise of powers under this Part
156CRequirement to supply information relating to payment system
156DOffence to fail to supply information
156ERequirement that information be audited
156FOffence not to comply with requirement for audit
156GDisclosure of information
156HLimits on further disclosure of information
156IApplication of other enactments to information published or disclosed under section 156G
156JPenalties for offences
156KExercise of powers under this Part
156LLimit on FMA’s powers in relation to Bank
156MDefinitions for this Part
156NDesignation of settlement system
156OJoint regulators’ recommendations subject to procedure in sections 156Y to 156ZA
156PApplication of this Part to pure payment systems
156QRules of designated settlement system are valid and enforceable
156RSettlements must not be reversed, etc
156SLimits on application of section 156R(1)
156TNetting is valid and enforceable
156UInterrelationship between netting and Companies Act 1993 and Insolvency Act 2006
156VUnderlying transactions, settlements, and limits on effect of sections 156Q, 156R, and 156T
156WInterrelationship with other enactments
156XTransfer of property in accordance with rules is effective
156YApplication for designation
156ZConsideration of application
156ZADecision on application
156ZBJoint regulators must be notified of proposed amendments to rules
156ZCProposed amendments to rules may be disallowed
156ZDVariation of designation
156ZERevocation of designation
156ZFSettlement and netting not affected by variation or revocation of designation
156ZGApplication for variation or revocation of designation
156ZHEither joint regulator may independently begin review of designation
156ZIMatters joint regulators may have regard to in recommending variation or revocation of designation
156ZJProcedure for variation or revocation of designation
156ZKContact person must be notified of insolvency event
156ZLSupply of information relating to designated settlement system
156ZMDisclosure of information between joint regulators
156ZNDisclosure of information to third parties
156ZOLimits on further disclosure of information
156ZPApplication of other enactments to information published or disclosed under section 156ZN
156ZQPenalties for offences
157AExercise of powers under this Part [Repealed]
157BInterpretation [Repealed]
157CDeposit taker defined [Repealed]
157DApplication of Part [Repealed]
157EBank to consult before recommending making of regulations under this Part [Repealed]
157FPrinciples to be taken into account under this Part [Repealed]
157GExemptions from Part [Repealed]
157HEffect of exemption [Repealed]
157IDeposit taker must have current credit rating [Repealed]
157JBank may approve rating agencies [Repealed]
157KRegulations relating to credit ratings [Repealed]
157LGovernance requirements [Repealed]
157MDeposit taker must have and comply with risk management programme [Repealed]
157NRisk management programme must be provided to trustee and must be amended if required by trustee [Repealed]
157OTrustee may require deposit taker to have risk management programme audited [Repealed]
157PRegulations may impose requirement that trust deed sets out minimum capital that deposit taker is required to maintain [Repealed]
157QDeposit takers and trustees must ensure trust deed sets out minimum capital deposit taker is required to maintain [Repealed]
157RDeposit taker must maintain not less than minimum capital prescribed [Repealed]
157SRegulations may impose requirement that trust deed includes capital ratio [Repealed]
157TDeposit takers and trustees must ensure capital ratio included in trust deed [Repealed]
157UDeposit taker must maintain capital ratio required to be included in trust deed [Repealed]
157VRegulations may impose requirement that trust deed includes maximum limit on exposures to related parties [Repealed]
157WRegulations may incorporate by reference framework for calculation of maximum limit on exposures to related parties [Repealed]
157XDeposit takers and trustees must ensure maximum limit on exposures to related parties is included in trust deed [Repealed]
157YDeposit taker must not exceed maximum limit on related party exposures [Repealed]
157ZRegulations may impose requirement that liquidity requirements be included in trust deed [Repealed]
157ZADeposit takers and trustees must ensure liquidity requirements are included in trust deeds [Repealed]
157ZBDeposit takers must comply with liquidity requirements in trust deeds [Repealed]
157ZCAmendment to trust deed must be treated as if authorised to be made [Repealed]
157ZDTrustee may execute amendment to trust deed [Repealed]
157ZEBank may require trustee to attest as to deposit taker’s compliance with requirements [Repealed]
157ZFTrustee must report to Bank non-compliance or likely non-compliance by deposit taker [Repealed]
157ZGObligation on trustees to disclose information to Bank in certain circumstances [Repealed]
157ZHProtection of trustees [Repealed]
157ZIBank may require report relating to deposit taker [Repealed]
157ZJPower to obtain information and documents [Repealed]
157ZKLimitation on information to be provided [Repealed]
157ZLLimitations on entering and searching place [Repealed]
157ZMSearch warrant may be issued [Repealed]
157ZNPrivileges [Repealed]
157ZOConfidentiality of information [Repealed]
157ZPPerson who does not comply with section 157ZO commits offence [Repealed]
157ZQApplication of Official Information Act 1982, etc [Repealed]
157ZROffences by deposit takers against this Part [Repealed]
157ZSOther offences by deposit takers against this Part [Repealed]
157ZTDefence for deposit takers charged with offences against this Part [Repealed]
157ZUPower of court to discharge deposit taker [Repealed]
157ZVLiability of directors [Repealed]
157ZWOffences by trustees against this Part [Repealed]
157ZXPenalties for offences [Repealed]
157ZYMatters relating to regulation-making powers under this Part [Repealed]
157ZZBank must review and report on operation of this Part [Repealed]
157Financial year [Repealed]
158Meaning of notional surplus income [Repealed]
159Funding agreements [Repealed]
160Contents of funding agreements [Repealed]
161Funding agreements to be ratified by House of Representatives [Repealed]
162Determination of annual dividend [Repealed]
162AAPurpose of accountability documents [Repealed]
162ABAssessment of regulatory impacts of policies [Repealed]
162AObligation to provide statement of intent [Repealed]
162BContent of statement of intent [Repealed]
162CProcess for providing statement of intent to Minister [Repealed]
162DAmendments by Bank to statement of intent [Repealed]
162EStatement of intent stands referred to House of Representatives [Repealed]
163Annual reports and accounts [Repealed]
163ABank not Crown entity [Repealed]
164Contents of financial statements [Repealed]
165Management statements [Repealed]
165AFinancial stability reports [Repealed]
166Auditor-General to be auditor of Bank [Repealed]
167Performance audit [Repealed]
168Bank to be good employer [Repealed]
169Bank to exhibit sense of social responsibility [Repealed]
170Application of Banking Act 1982 to Bank [Repealed]
171Conflict with other Acts [Repealed]
172Obligations under this Act not limited
174Consents under regulations
175Offences against regulations
175APrivilege against self-incrimination no excuse [Repealed]
175BAdmissibility of self-incriminating statements [Repealed]
176Penalties for offences
177Time for filing charging document
178Evidence [Repealed]
179Protection from liability [Repealed]
179AIndemnity [Repealed]
180Amendment to Income Tax Act 1976 [Repealed]
181Amendments to Securities Act 1978 [Repealed]
182Amendments to Superannuation Schemes Act 1989 [Repealed]
183Amendments to Trustee Banks Restructuring Act 1988 [Repealed]
184Amendment to Securities Amendment Act 1988 [Repealed]
185Consequential amendments [Repealed]
186Repeals and savings [Repealed]
187References to trading banks to be read as references to registered banks
188Savings [Repealed]
189Procedure for applying this Act to persons subject to statutory management under Reserve Bank of New Zealand Act 1964 [Repealed]
190Transitional provisions in relation to Part 5A and Part 5C of Reserve Bank of New Zealand Act 1964 [Repealed]
191Transitional provisions in relation to office holders [Repealed]
192Transitional provision in relation to accounts of Bank [Repealed]
Title [Repealed]

Title: repealed, on 10 September 2008, by section 4 of the Reserve Bank of New Zealand Amendment Act 2008 (2008 No 59).