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The Reserve Bank of New Zealand Act (Overseas Banks) Class Authorisation Notice 2019 has been extended to 31 December 2026, and renamed the Banking (Prudential Supervision) Act (Overseas Banks) Class Authorisation Notice 2019 (Class Authorisation Notice).
Extension and amendment of Authorisation Notice
The Banking (Prudential Supervision) Act (Overseas Banks) Class Authorisation Amendment Notice 2024 extends the revocation date for all class authorisations specified in the Class Authorisation Notice from 22 September 2024 to 31 December 2026, and updates references in the Class Authorisation Notice (including in its title) to the BPSA, to reflect that Act’s change of name in July 2022.
The extension may reflect the fact that the Reserve Bank of New Zealand (Reserve Bank) will need to re-assess the breadth of the Class Authorisation Notice in light of the commencement of the relevant provisions of the Deposit Takers Act 2023 which will replace Section 64 of the BPSA (currently expected to be in mid-2028), and the new licencing regime for overseas banks, which proposes limiting them to carrying on wholesale operations in New Zealand.
Background
The Reserve Bank issued the Class Authorisation Notice in 2019, following recommendations from a committee of leading lawyers, chaired by Chapman Tripp partner, Tim Williams.
The Authorisation provides relief from the restrictions in section 64 of the (renamed) Banking (Prudential Supervision) Act 1989 (BPSA) for overseas banks which do not have a place of business in New Zealand but conduct business with New Zealand-based wholesale clients.
Section 64 of the BPSA prohibits any financial institution, other than the Reserve Bank, a New Zealand registered bank, or a person authorised by the Reserve Bank, from having, or using, the words "bank", "banker", or "banking", in its name or title, including as part of any other word, and translations into another language.
To rely on the Class Authorisation Notice, an overseas bank is required to meet specific conditions, including limiting their business in New Zealand to the wholesale banking activities specified in the Authorisation Notice and providing regular reports to the Reserve Bank.
