Academic journal article The Reserve Bank of New Zealand Bulletin

Background to Reserve Bank Consent to ANZ/National Bank Amalgamation

Academic journal article The Reserve Bank of New Zealand Bulletin

Background to Reserve Bank Consent to ANZ/National Bank Amalgamation

Article excerpt

This note provides some background to the basis on which the Reserve Bank has given its consent to the amalgamation of the ANZ and National Bank into a single bank.

The merger has required the Reserve Bank to apply recently developed policy objectives for large overseas-owned banks to a specific case, for the first time. As a result, a new template has been established that we are looking to apply to the other large banks in due course.

That template includes standard conditions of registration relating to, amongst other things, capital adequacy and the nature and scope of the business. But there are also two additional conditions relating to the role and responsibilities of the bank's board of directors and of its senior management, and to the need for the bank to have an independent operating capability in New Zealand.

First, we have firmed up on the requirement that the board of directors of a foreign-owned bank must act in the interests of the New Zealand bank, rather than in the interests of the overseas banking group of which it is a part. This policy will be effective across all major banks from July 1 2004.

In addition, for ANZ National Bank, we require that the primary reporting relationships of senior executives in New Zealand be to the New Zealand chief executive, and through the chief executive to the New Zealand board. This is in contrast to a trend in recent years for New Zealand bank managements to operate under arrangements that included direct reporting to overseas parent bank management. …

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