Economic Note: What to make of proposed bank capital requirements
- The RBNZ has proposed increased capital requirements for NZ banks to bolster financial system resilience. Other global regulators are raising (or are proposing to raise) capital requirements.
- Higher capital ratios are expected to translate into a higher overall cost of NZ bank funding and higher customer borrowing rates. The range of estimates is wide, with our central estimates equating to about a 50bp impact by late 2023, with risks of a higher impact. Interest rate impacts will be also be uneven across the economy. Bank retail deposit interest rates may also fall.
- The full impact of higher bank capital requirements will take time to percolate through the economy, but its pending imposition is another reason why we have changed our forecast profile for the OCR, including 50bps of cuts over 2019 and the OCR then on hold at 1.25% until 2022.
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Nick Tuffley
ASB Chief Economist
Since starting out in 1997 as an economist, it's fair to say Nick has seen a few hair-raising moments over the years, including the Asian Financial Crisis and the Global Financial Crisis.
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Nick grew up in Christchurch and graduated with a Master of Commerce degree from the University of Canterbury. He learned his economic ropes at the Reserve Bank of New Zealand before a long stint as a Senior Economist at Westpac, and joined ASB as Chief Economist in 2007.
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Mark Smith
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Mark joined ASB in 2017, with over 20 years of public and private sector experience working as an economist in New Zealand and the UK.
His resume includes lengthy stints at ANZ and the Reserve Bank of New Zealand, and he has also worked at the Bank of England, HM Treasury and the New Zealand Transport Agency. Mark's areas of specialisation include interest rate strategy, macro-economic analysis and urban economics.
Born and bred in the Waikato, Mark studied at Waikato University where he graduated with a Master of Social Sciences, majoring in Economics.
Mark's key strengths are the ability to use his extensive experience, inquisitive nature, analytical ability, creativity and pragmatism to dig a little deeper and to deliver common sense solutions to tackle complex problems.
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Yen Nguyen
Economist
Yen Nguyen joined ASB Bank in June 2024, bringing over 10 years of experience as a policy analyst in the Vietnamese government. Her expertise lies in macroeconomic and policy analysis, with a strong focus on economic strategy and regulatory frameworks.
Yen grew up in Hanoi, Vietnam and holds a Master’s Degree in International Studies from Korea University (Seoul) and a Ph.D. in Economics from the University of Auckland. Her current focus is on New Zealand’s housing market and regional development, delivering clear, practical insights to help New Zealanders understand market trends, and the economic factors influencing their communities.
Yen is passionate about applying her skills to address real-world economic challenges and supporting sustainable development.
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