Reserve Bank of New Zealand (Covered Bonds) Amendment Bill

  • not the latest version

Reserve Bank of New Zealand (Covered Bonds) Amendment Bill

Government Bill

19—1

Explanatory note

General policy statement

The primary purpose of this Bill is to establish a legislative framework for covered bonds, the purpose of which is to ensure that New Zealand registered banks have access to the covered bond market as a source of long-term relatively stable finance.

A covered bond is a dual-recourse instrument under which bond-holders both have an unsecured claim on the issuing bank and hold a secured interest over a specific pool of assets, called the cover pool.

Covered bonds can be distinguished from senior unsecured debt instruments issued by banks, where the bond-holder is simply an unsecured creditor of the bank, and also from mortgage-backed securities, where the bond-holder holds a secured interest in the cover pool but has no claim on the issuing bank.

The main objective of this Bill is to provide legal certainty as to the treatment of cover pool assets in the event that an issuing bank is placed into liquidation or statutory management. Legal certainty would increase economic efficiency and financial stability because banks would not have to pay an uncertainty premium to obtain covered bond funding and because certainty would improve banks' access to the covered bond market.

The framework provided for by the Bill seeks to achieve legal certainty through—

  • clear segregation of cover pool assets from an issuing bank’s other assets:

  • making certain the treatment of cover pool assets under legislative provisions that would apply should an issuing bank be placed into statutory management or liquidation.

The secondary objective of this Bill is to improve investor confidence in New Zealand covered bonds by requiring independent verification of information provided by issuers about cover pools.

The key aspects of the framework established by the Bill are—

  • mandatory registration of New Zealand banks' covered bond programmes, subject to meeting registration requirements:

  • requiring that cover pool assets be held by a special purpose vehicle (SPV), which is a separate legal entity from the issuer:

  • independent monitoring of cover pools by a cover pool monitor:

  • clarification of the treatment of cover pool assets held by a covered bond SPV in the event that an issuer is placed into statutory management or liquidation.

The Bill also makes provision for the Reserve Bank of New Zealand to allow entities other than registered banks to register covered bond programmes under this legislative framework in the future.

Regulatory impact statement

The Reserve Bank of New Zealand has produced a regulatory impact statement in relation to this Bill. A copy of that regulatory impact statement, dated 28 March 2012, can be found at—

Clause by clause analysis

Clause 1 is the Title clause.

Clause 2 is the commencement clause, which provides that this Bill comes into force on the day after the date on which it receives the Royal assent.

Clause 3 provides that this Bill amends the Reserve Bank of New Zealand Act 1989 (the Act).

Part 1
Amendments to principal Act

Clauses 4 to 8 amend sections 117, 122, 126, 127, and 128 of the Act by inserting new subsections that make those provisions subject to new section 139J. New section 139J limits the application of those provisions in relation to covered bond SPVs.

Clause 9 inserts new sections 139A to 139J, which deal with covered bonds.

New section 139A is the interpretation section, which contains definitions for the purposes of new sections 139B to 139J, including definitions of cover pool, cover pool monitor, covered bond, and covered bond programme. The definitions of covered bond SPV and issuer are set out separately in new sections 139B and 139C respectively.

New section 139D deals with matters relating to the register of registered covered bond programmes. The register is to be a publicly available register, with its form and content being determined by the Reserve Bank of New Zealand (the Bank). Covered bond programmes may be registered subject to a class designation based on the assets in the relevant cover pool. A registered covered bond programme must remain on the register until all obligations under the programme have been fulfilled. However, the Bank may remove a programme from the register before this time if the issuer requests its removal and both the relevant bond trustee and security trustee consent to the removal. To avoid doubt, new section 139D(6) provides that registration occurs at the time and date that the Bank enters the details of the programme on the register and that neither defects in the registration of a programme nor the failure of an issuer to register a programme or to comply with new section 139H affects the enforcement of rights in relation to that programme or any covered bond issued under that programme.

New section 139E(1) provides that an issuer must not issue covered bonds except under a registered covered bond programme. New section 139E(2) and (3) provides that, to register a covered bond programme, the issuer must apply to the Bank, in the manner specified by the Bank, and pay a fee (if any). An issuer must also, in relation to such an application, provide any information that the Bank requires to enable it to determine the application (new section 139E(4)). It will be an offence under new section 139E(5) for an issuer to issue a covered bond other than under a registered covered bond programme or to provide false or misleading information in relation to an application. New section 139E(6) applies the penalty set out in section 156AB to such offences.

New section 139F(1) provides that the Bank must not register a covered bond programme unless it is satisfied that the requirements set out in new section 139F(2) are met. These requirements relate to both the issuer and the covered bond programme, and include requirements as to the cover pool assets and the cover pool monitor. New section 139F(3) empowers the making of regulations for the purposes of new section 139F(2). Regulations may be made in relation to issuers, covered bond SPVs, and to requirements that are in addition to those specified in new subsection 139F(2).

New section 139G(1) provides that the Bank must either approve or decline an application from an issuer to register a covered bond programme. If the Bank is satisfied that the requirements of new section 139F(2) are met, it must register the covered bond programme and give its written decision to the issuer within 60 working days after the Bank receives all the information that it requires to determine the application (new section 139G(4)). If the Bank proposes to decline the application, it must give the issuer notice of that proposed decision, invite the issuer to provide submissions or further information, take account of any submissions or further information received, and give its final written decision to the issuer: the entire process must be completed within 60 working of receiving all the information that the Bank requires to determine the application (new section 139G(5)). However, the times specified in new section 139G(4) and (5) can be modified by agreement between the Bank and the issuer (new section 139G(6)).

New section 139H(1) sets out the requirements relating to registered covered bond programmes, and the onus is on the issuer to ensure that those requirements are met. If the issuer fails to meet the requirements, the Bank may issue a written notice to the issuer, requiring it to take corrective action and, if the issuer fails to comply with the notice, the issuer commits an offence (new section 139H(2) and (3)). New section 139H(4) applies the penalty set out in section 156AB to such an offence.

New section 139I deals with the requirements applying to cover pool monitors. The cover pool monitor must be both independent of the issuer (as described in new section 139I(7) and (8)) and a licensed auditor under the Auditor Regulation Act 2011, or (subject to meeting certain conditions) a registered audit firm under that Act, or a member of a class of persons or firms that has been approved by the Bank. The cover pool monitor must also be required, under its contract of appointment, to verify the accuracy of the tests required under new section 139H(1)(a) (which relates to the value of the cover pool assets and which in turn relates to the requirements of new section 139F(2)(e)) and new section 139H(1)(b) (which relates to the keeping of a register of assets). New section 139I(3) imposes 12-monthly reporting obligations on the cover pool monitor but, if the circumstances in new section 139I(4) apply (which involve non-compliance in relation to the tests and the keeping of the register), the reporting must occur at 3-monthly intervals until the non-compliance is remedied. The cover pool monitor's reporting obligations cease if the covered bond SPV is subject to liquidation, receivership, statutory management, or voluntary administration (new section 139I(5)). New section 139I(6) empowers the making of regulations to specify additional reporting matters for the purposes of new section 139I(2).

New section 139J limits the application of certain statutory management, receivership, and liquidation provisions (as specified in new section 139J(1)) to covered bond SPVs. These provisions are to ensure that, where an issuer falls within any of the processes under the provisions listed in new section 139J(1), the covered bond SPV is not included as an associated person, a subsidiary, or a related company, as the case may be (see new section 139J(4)). New section 139J(2) specifies how the specified provisions are limited in relation to covered bond SPVs. However, new section 139J(3) provides that those limitations apply only if the covered bond SPV is the owner of the assets in the cover pool and the covered bond programme is registered under new section 139G.

Clause 10 amends section 156AB(2) by inserting new paragraphs (g) to (i). New paragraphs (g) to (i) include references to the offences created by new sections 139E(5)(a) and (b) and 139H(3).

Part 2
Transitional provisions and amendments to other Acts

Clause 11 provides for transitional matters in relation to this Bill coming into force. There is an ability, but no requirement, for issuers, in relation to existing covered bond programmes (as defined in clause 11(4)), to apply for registration of those programmes during the 6-month period after this Bill comes into force. In that case, the issuer does not, unless registration of the programme has been declined, fall within the prohibition in new section 139E(1) in relation to covered bonds issued under such programmes. However, all existing covered bond programmes must be registered by the date on which that period ends, and the amendments made by this Bill will apply in full on and from that date.

Clause 12 and the Schedule deal with consequential amendments to other Acts. These amendments relate to the limitations to the provisions listed in new section 139J(1).

Hon Bill English

Reserve Bank of New Zealand (Covered Bonds) Amendment Bill

Government Bill

19—1

The Parliament of New Zealand enacts as follows:

1 Title

  • This Act is the Reserve Bank of New Zealand (Covered Bonds) Amendment Act 2012.

2 Commencement

  • This Act comes into force on the day after the date on which it receives the Royal assent.

3 Principal Act

  • This Act amends the Reserve Bank of New Zealand Act 1989 (the principal Act).

Part 1
Amendments to principal Act

4 Section 117 amended (Statutory management of registered banks and associated persons)

  • After section 117(6), insert:

    • “(7) Subsections (1)(a) and (2) are subject to section 139J(4).”

5 Section 122 amended (Moratorium)

  • After section 122(9), insert:

    • “(10) This section is subject to section 139J(1) to (3).”

6 Section 126 amended (Prohibition against removal of assets)

  • After section 126(3), insert:

    • “(4) This section is subject to section 139J(1) to (3).”

7 Section 127 amended (Statutory manager may suspend payment of money owing)

  • After section 127(4), insert:

    • “(5) This section is subject to section 139J(1) to (3).”

8 Section 128 amended (Management of registered bank to vest in statutory manager)

  • After section 128(2), insert:

    • “(3) Subsection (2) is subject to section 139J(1) to (3).”

9 New sections 139A to 139J and cross-headings inserted

  • After section 139, insert:

    “Interpretation relating to covered bonds

    “139A Interpretation

    • In sections 139B to 139J, unless the context otherwise requires,—

      “cover pool, in relation to a covered bond programme, means assets that—

      • “(a) are owned by the relevant covered bond SPV; and

      • “(b) secure the obligations of that SPV under the covered bond programme

      “cover pool monitor means a person that meets the requirements of section 139I(1)

      “covered bond means a bond, note, or other debt security that has the following features:

      • “(a) it represents an unsecured obligation of the issuer; and

      • “(b) the issuer's obligations under the bond, note, or other debt security are guaranteed by a covered bond SPV; and

      • “(c) the obligations under that guarantee are secured by assets that are owned by that SPV

      “covered bond programme means any programme of covered bonds under which, on the security of a single cover pool, covered bonds may be issued

      “covered bond SPV has the meaning given to it by section 139B

      “issuer has the meaning given to it by section 139C

      “own includes holding a beneficial, or legal, interest or entitlement, and owned and owner have corresponding meanings

      “registered covered bond means a covered bond issued under a registered covered bond programme

      “registered covered bond programme means a covered bond programme that has been registered under section 139G

      “SPV means a special purpose vehicle.

    “139B Meaning of covered bond SPV

    • “For the purposes of sections 139A and 139C to 139J, covered bond SPV means, in relation to a covered bond programme, a person that—

      • “(a) is the owner of an asset that has been, or will be, sold, assigned, or otherwise transferred to it by, or on behalf of, an issuer or an associated person of an issuer; and

      • “(b) has granted, or may grant, a security interest in that asset for the benefit of the secured creditors under the covered bond programme; and

      • “(c) carries on a business of acting as covered bond guarantor under the covered bond programme (including any business incidental to that purpose); and

      • “(d) (other than as described in paragraph (c)) does not carry on any other kind of business.

    “139C Meaning of issuer

    • “(1)  For the purposes of sections 139A, 139B, and 139D to 139J, issuer means—

      • “(a) the person referred to in section 139F(2)(a) (issuer A); or

      • “(b) if issuer A transfers the benefits and obligations relating to a registered covered bond to another person, that other person.

      “(2) However, if the person referred to in subsection (1)(b) is not a person of the type referred to in section 139F(2)(a), issuer A is to be treated as the issuer, despite the transfer.

    “Registration of covered bond programmes

    “139D Register of registered covered bond programmes

    • “(1) The Bank must keep a public register of registered covered bond programmes.

      “(2) The Bank—

      • “(a) must determine the form and content of the register and may amend that form and content as it considers necessary; and

      • “(b) may, based on the assets in the relevant cover pool, designate registered covered bond programmes to particular classes of registered covered bond programmes, as specified by the Bank.

      “(3) The Bank must take all reasonable steps to ensure that the information contained in the public register is available to members of the public at all reasonable times.

      “(4) A registered covered bond programme must remain on the register—

      • “(a) until all obligations under that programme have been fulfilled; and

      • “(b) despite—

        • “(i) any defects in the registration process; or

        • “(ii) any failure by an issuer to comply with any of the requirements of section 139H.

      “(5) However, despite subsection (4), the Bank may remove a registered covered bond programme from the register if the issuer—

      • “(a) requests the removal; and

      • “(b) provides the Bank with evidence, acceptable to the Bank, that both the relevant bond trustee and security trustee consent to the removal.

      “(6) To avoid doubt,—

      • “(a) registration occurs at the time and date that the Bank enters the details relating to the programme on the register:

      • “(b) a defect in the registration process of a covered bond programme does not affect a person's ability to enforce his, her, or its rights in relation to that covered bond programme or any covered bond issued under that programme:

      • “(c) the failure of an issuer to register a covered bond programme or to comply with any requirement under section 139H does not affect any other person's ability to enforce his, her, or its rights in relation to that covered bond programme or any covered bond issued under that programme.

    “139E Requirement, and application, for registration of covered bond programme

    • “(1) An issuer must not issue a covered bond other than under a registered covered bond programme.

      “(2) An issuer must apply to the Bank to register a covered bond programme.

      “(3) An application must be—

      • “(a) made in the manner specified by the Bank; and

      • “(b) accompanied by a fee (if any), as determined by the Bank and approved by the Minister by notice in the Gazette.

      “(4) The issuer must provide the Bank with any information that the Bank requires to enable it to determine the application.

      “(5) An issuer commits an offence if, without lawful justification or excuse, the issuer—

      • “(a) issues a covered bond other than under a registered covered bond programme; or

      • “(b) provides information for the purposes of an application that is false or misleading in any material particular.

      “(6) The penalty for an offence against this section is set out in section 156AB.

    “139F Determination of application for registration of covered bond programme

    • “(1) The Bank must not register a covered bond programme unless it is satisfied that the requirements set out in subsection (2) are met.

      “(2) The requirements are as follows:

      • “(a) the issuer is either—

        • “(i) a registered bank that—

          • “(A) issues, or intends to issue, covered bonds; or

          • “(B) guarantees the covered bonds issued under a registered covered bond programme; or

        • “(ii) an entity, or a class of entity, specified in regulations made under subsection (3); and

      • “(b) the cover pool assets are, or will be, owned by an identified covered bond SPV that—

        • “(i) is a company (within the meaning given in section 2(1) of the Companies Act 1993); or

        • “(ii) is a person or partnership specified in regulations made under subsection (3); and

      • “(c) a cover pool monitor has been appointed to the covered bond programme; and

      • “(d) if, in accordance with section 139D(2)(b), the covered bond programme is to be designated to a particular class, that programme provides appropriate constraints to ensure that the cover pool remains consistent with that designation; and

      • “(e) the covered bond programme specifies a test, or tests, to determine, in accordance with any procedures specified in that programme, whether the value of the cover pool assets is at least equal to the principal amount outstanding on the covered bonds; and

      • “(f) that the covered bond programme provides for the covered bond SPV to perform, or arrange to have performed on its behalf, the requirements of section 139H(1)(a), (b), (e), and (f) in the case that any amounts become due and payable by the covered bond SPV under the covered bond programme; and

      • “(g) the issuer is in compliance with all other requirements imposed in relation to covered bonds by, or under,—

        • “(i) section 74; or

        • “(ii) regulations made under subsection (3).

      “(3) The Governor-General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank, make regulations—

      • “(a) specifying entities, or classes of entities, for the purposes of subsection (2)(a)(ii):

      • “(b) specifying persons or partnerships, or classes of persons or partnerships, for the purposes of subsection 2(b)(ii):

      • “(c) prescribing additional requirements for the purposes of subsection (2)(g)(ii):

      • “(d) prescribing conditions in relation to the entities, persons, or partnerships referred to in paragraphs (a) and (b).

    “139G Bank must approve or decline application

    • “(1) Having considered an application under section 139E(2), the Bank must either approve or decline the application.

      “(2) If the Bank is satisfied that an issuer meets the requirements of section 139F(2), the Bank must approve the application and register the programme.

      “(3) The Bank must otherwise decline the application.

      “(4) If the Bank approves the application, it must give its decision to the issuer—

      • “(a) in writing; and

      • “(b) within 60 working days after receiving all the information required by the Bank to determine the application.

      “(5) If the Bank proposes to decline the application, the Bank must, within 60 working days after receiving all the information required to determine the application,—

      • “(a) give the issuer notice, in writing, of that proposed decision, and the reasons for it; and

      • “(b) invite the issuer to provide, within 10 working days after the date of the notice, submissions, or further information, in response to that proposed decision; and

      • “(c) take account of any submissions and further information it receives from the issuer; and

      • “(d) give its final decision to the issuer—

        • “(i) in writing; and

        • “(ii) within 5 working days after the expiry of the time specified in paragraph (b) (whether or not the Bank receives any submissions or further information).

      “(6) Nothing in this section prevents the Bank and the issuer from agreeing to modify the time limits specified in subsections (4) and (5).

    “139H Requirements relating to registered covered bond programmes

    • “(1) Every issuer must, in relation to a registered covered bond programme,—

      • “(a) ensure that the test or tests specified in section 139F(2)(e) are carried out at intervals of not more than 12 months and notify the Bank if the result of such test or tests is that the value of the cover pool assets is less than the principal amount outstanding on the covered bonds; and

      • “(b) ensure that a register of assets is maintained in accordance with any procedures specified in the covered bond programme; and

      • “(c) notify the Bank of every covered bond issued under the registered covered bond programme, and provide the Bank with any information it requests in relation to those covered bonds; and

      • “(d) ensure that it continues to comply with the requirements of section 139F(2), including notifying the Bank of any material changes to the registered covered bond programme that may result in the registered covered bond programme no longer meeting the requirements of section 139F(2); and

      • “(e) ensure that the report referred to in section 139I(3) is provided to any bond trustee and security trustee appointed under the covered bond programme; and

      • “(f) ensure that the Bank is provided with a copy of—

        • “(i) every report prepared by the cover pool monitor in accordance with section 139I(4); and

        • “(ii) if requested by the Bank, any other report prepared by the cover pool monitor in accordance with section 139I(3).

      “(2) If an issuer fails to comply with any of the requirements of subsection (1) the Bank may, by notice in writing to the issuer, require the issuer to take such corrective action as the Bank may specify in the notice.

      “(3) An issuer commits an offence if the issuer, without lawful justification or excuse, fails to comply with a notice issued under subsection (2).

      “(4) The penalty for an offence against this section is set out in section 156AB.

    “Cover pool monitor

    “139I Cover pool monitor

    • “(1) The cover pool monitor must be—

      • “(a) independent of the issuer; and

      • “(b) 1 or more of the following:

        • “(i) a licensed auditor under the Auditor Regulation Act 2011:

        • “(ii) (if the issuer ensures that appropriate arrangements are in place to ensure that the functions of the monitor are performed by, or under the supervision of, a licensed auditor) a registered audit firm under the Auditor Regulation Act 2011:

        • “(iii) a member of any other class of persons or firms that has been approved by the Bank; and

      • “(c) required, under its contract of appointment, to verify, at any point in time and in accordance with the procedures specified in the covered bond programme,—

        • “(i) the arithmetical accuracy of the tests carried out in accordance with section 139H(1)(a); and

        • “(ii) the accurate keeping of the register referred to in section 139H(1)(b).

      “(2) The cover pool monitor must also report on any matters required by regulations made under subsection (6).

      “(3) The cover pool monitor must provide the issuer with reports on the matters required under subsection (1)(c) at intervals of not more than 12 months.

      “(4) However, if the cover pool monitor finds that the issuer has not complied with the matters referred to in subsection (1)(c), the monitor must, until those matters have been complied with, provide reports at intervals of not more than 3 months.

      “(5) The cover pool monitor's obligation to provide reports under this section ceases if the covered bond SPV is subject to—

      • “(a) liquidation; or

      • “(b) receivership; or

      • “(c) statutory management; or

      • “(d) voluntary administration.

      “(6) The Governor-General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank, make regulations specifying additional matters that the cover pool monitor must report on, and the information to be provided with such report, for the purposes of subsection (2).

      “(7) For the purposes of this section, independent means independent of both the issuer and any associated person of the issuer.

      “(8) However, to avoid doubt, a person is not to be considered independent merely because of that person's appointment as auditor.

    “Statutory management, etc, of issuer

    “139J Limitation on application of statutory management, etc, provisions to covered bond SPV

    • “(1) Subsections (2) and (3) apply in relation to the following provisions:

      • “(a) sections 122(1), 126, 127, and 128(2) of this Act:

      • “(b) section 248 of the Companies Act 1993:

      • “(c) sections 42, 43, 44, and 45(2) of the Corporations (Investigation and Management) Act 1989.

      “(2) Nothing in a provision referred to in subsection (1)—

      • “(a) prevents the transfer of the legal title to assets in a cover pool from an issuer to a covered bond SPV:

      • “(b) prevents the transfer, under a contract, of any documentation or data relating to assets in a cover pool from the issuer to a covered bond SPV or a person acting on behalf of that SPV:

      • “(c) prevents a covered bond SPV, or a person acting on behalf of that SPV, from exercising a power of attorney granted by the issuer in relation to assets in a cover pool:

      • “(d) affects the issuer's obligation to pay moneys, collected on behalf of, and held on trust for, a covered bond SPV, to that SPV:

      • “(e) prevents the enforcement of any of the above rights by, or on behalf of, a covered bond SPV.

      “(3) However, subsection (2) applies only if—

      • “(a) the covered bond SPV is the owner of the assets in the cover pool; and

      • “(b) the covered bond programme is registered under section 139G.

      “(4) A covered bond SPV is not—

      • “(a) an associated person for the purposes of section 117(1)(a) of this Act or section 38(1)(a) of the Corporations (Investigation and Management) Act 1989; or

      • “(b) a subsidiary for the purposes of section 117(2) of this Act or section 38(2) of the Corporations (Investigation and Management) Act 1989; or

      • “(c) a related company for the purposes of section 271 of the Companies Act 1993.”

10 Section 156AB amended (Penalty for offences relating to supply of information, etc)

  • After section 156AB(2)(f), insert:

    • “(g) section 139E(5)(a) (which relates to issuing a covered bond other than under a registered covered bond programme):

    • “(h) section 139E(5)(b) (which relates to providing false or misleading information to the Bank in relation to an application to register a covered bond):

    • “(i) section 139H(3) (which relates to failing to comply with a notice issued by the Bank in relation to the requirements of registration of a covered bond programme).”

Part 2
Transitional provisions and amendments to other Acts

11 Transitional provisions

  • (1) The amendments made by this Act apply in relation to existing covered bond programmes and issuers on and from the date that is 6 months after this Act comes into force.

    (2) However, despite subsection (1), an issuer may, in relation to an existing covered bond programme, make an application under section 139E (as inserted by section 9 of this Act) at any time on or after the commencement of this Act and, in that case, all other amendments made by this Act apply in relation to that application.

    (3) To avoid doubt,—

    • (a) section 139E(1) and 5(a) do not apply in relation to a covered bond issued, on or after the date that this Act comes into force, under an existing covered bond programme unless registration of that programme has been declined:

    • (b) all existing covered bond programmes must be registered under section 139G (as inserted by section 9 of this Act) before the date specified in subsection (1), after which time all amendments made by this Act (including section 139E(1)) apply.

    (4) In this section, existing covered bond programme means a covered bond programme that was established before this Act came into force.

12 Consequential amendments to other Acts

  • Amend the Acts specified in the Schedule as set out in that schedule.

Schedule
Consequential amendments to other Acts

s 12

Companies Act 1993 (1993 No 105)

After section 248(2), insert:

  • “(3) This section is subject to section 139J(1) to (3) of the Reserve Bank of New Zealand Act 1989.”

After subsection 271(2), insert:

  • “(3) This section is subject to section 139J(4) of the Reserve Bank of New Zealand Act 1989.”

Corporations (Investigation and Management) Act 1989 (1989 No 11)

In section 8(1), insert in its appropriate alphabetical order:

“covered bond SPV has the meaning given to it by section 139B of the Reserve Bank of New Zealand Act 1989”.

In section 8(3), replace “any licensed insurer or registered bank” with “any licensed insurer, registered bank, or covered bond SPV”.

After section 38(4), insert:

  • “(5) Subsections (1)(a) and (2) are subject to section 139J(4) of the Reserve Bank of New Zealand Act 1989.”

After section 42(8), insert:

  • “(8A) This section is subject to section 139J(1) to (3) of the Reserve Bank of New Zealand Act 1989.”

After section 43(3), insert:

  • “(4) This section is subject to section 139J(1) to (3) of the Reserve Bank of New Zealand Act 1989.”

After section 44(4), insert:

  • “(5) This section is subject to section 139J(1) to (3) of the Reserve Bank of New Zealand Act 1989.”

After section 45(2), insert:

  • “(3) Subsection (2) is subject to section 139J(1) to (3) of the Reserve Bank of New Zealand Act 1989.”