Following consultation in March this year, the Reserve Bank last week confirmed that it will impose increased capital adequacy requirements on banks from 1 January 2013 (with transitional measures). This is a further step to implement the new Basel III regime. Basel III was developed by the Basel Committee on Banking Supervision, an international body which formulates broad standards and guidelines for best practice in banking supervision, and aims to strengthen the international banking system. The Reserve Bank states that New Zealand banks are well placed to meet the new requirements and that the changes are in line with the Australian Prudential Regulation Authority's current plans.

The Reserve Bank has released a consultation package on proposed changes to the Banking Supervision Handbook to put into effect the Basel III requirements. Submissions are due on 9 October 2012. The consultation package and further information can be accessed here.