Statement of reasons

This notice, which comes into force on 1 December 2010, amends the Deposit Takers (In Receivership or Liquidation) Exemption Notice 2009 (the principal notice). The effect of the amendments is to grant further exemptions to deposit takers in receivership or liquidation from certain sections of the Reserve Bank of New Zealand Act 1989, namely sections 157L (governance requirements), 157T and 157U (capital ratio requirements), 157X and 157Y (related party exposures requirements), and 157ZA and 157ZB (liquidity requirements). The principal notice already exempts deposit takers in receivership or liquidation from sections 157I (requirement to have a credit rating) and 157M (risk management programme requirements) of the Act.

The Reserve Bank of New Zealand (the Bank), after taking into account the principles set out in section 157F of the Act and satisfying itself as to the matters set out in section 157G(2) of the Act, considers it appropriate to grant the additional exemptions because—

• the Bank is satisfied that the exemption is consistent with the maintenance of a sound and efficient financial system:

• compliance with the governance, capital ratio, related party exposures, and liquidity requirements would be unduly onerous and burdensome and very difficult to achieve under the circumstances, given that a deposit taker in receivership or liquidation is subject to external management intended to realise its assets for the benefit of existing creditors:

• limiting this exemption only to deposit takers in liquidation or those in receivership that are not offering deposits to the general public ensures that this exemption is not broader than necessary in that it only applies to entities that have no, or little likelihood of, ongoing viability; but at the same time it does not preclude the possibility of investment, for example, by a wealthy or experienced investor, that may assist an entity in receivership.