Capital Adequacy Policy¶
| Code | CLQ-001 |
| Domain | Capital & Liquidity |
| Owner | Chief Financial Officer |
| Status | Draft |
| Applicability | Platform |
| Jurisdiction | NZ + AU |
| Business domain | BD03 |
| Review date | 2027-03-25 |
Regulations: APS 110 Capital Adequacy · Basel III / Basel IV — Capital and Liquidity Framework · RBNZ BS3B/BS3C Disclosure · APS 112¶
Purpose¶
Govern the platform's minimum regulatory capital ratios, capital composition requirements, CET1 and buffer obligations, and the escalation framework for capital adequacy breaches. Ensures that the platform maintains capital adequacy at all times under both NZ (RBNZ) and AU (APRA) prudential requirements.
Scope¶
All capital measurement, monitoring, and management activities for the NZ banking entity and AU operations. Covers Common Equity Tier 1 (CET1), Additional Tier 1, Tier 2, and Total Capital ratios, including the RBNZ Prudential Capital Buffer (PCB) and APRA Capital Conservation Buffer (CCB).
Policy statements¶
The platform SHALL maintain capital ratios at or above the following regulatory minimums at all times: CET1 ≥ 4.5% plus the applicable buffer (NZ PCB ≥ 3.5%; AU CCB ≥ 2.5%); Tier 1 Capital ≥ 6.0%; Total Capital ≥ 8.0%.
The platform's target operating range for CET1 SHALL be set above the regulatory minimum plus buffer to provide a management buffer. The target operating range SHALL be defined in the Risk Appetite Statement (GOV-002) and reviewed annually or following a material change in the capital position.
Capital ratios SHALL be calculated daily from live data using the governed risk engine (MOD-033). Capital ratio calculations submitted to regulators or the Board SHALL be sourced exclusively from MOD-033; manual ratio calculations are prohibited.
Capital instruments included in CET1, Additional Tier 1, or Tier 2 capital SHALL only be instruments that satisfy the eligibility criteria in APRA APS 110 (AU) and the RBNZ Capital Adequacy Framework (NZ). The capital classification of each instrument SHALL be documented and reviewed whenever the instrument terms change.
No capital distribution — including ordinary dividends, preference dividends, discretionary AT1 coupon payments, or share buybacks — SHALL be made or committed to where the distribution would cause any capital ratio to fall below the regulatory minimum plus the applicable buffer requirement.
Where a distribution restriction is triggered by a buffer breach, the Maximum Distributable Amount (MDA) framework SHALL be applied to determine the maximum permissible distribution before any payment is approved.
Any projected or actual breach of a minimum capital ratio or buffer SHALL be escalated to the CEO and Board within 4 hours of identification. A capital recovery plan SHALL be activated immediately per CAP-003.
The CRO and CFO SHALL jointly attest to capital adequacy at each Board Risk Committee meeting, based on the most recent capital ratio report produced by MOD-033.
Risk-weighted assets SHALL be calculated using the standardised approach (or an approved internal models approach where applicable). Manual overrides to RWA inputs or weightings are prohibited outside the governed change process.
All capital ratio calculations, instrument classification schedules, Board attestation records, and distribution decisions SHALL be retained for 7 years.
Satisfying modules¶
| Module | Name | Mode | Description |
|---|---|---|---|
| MOD-004 | Multi-currency ledger (NZD/AUD) | CALC |
Capital ratios calculated against currency-adjusted RWA — multi-currency positions visible |
| MOD-028 | Credit score & risk rating | CALC |
Risk rating maps to Basel risk weight — feeds RWA calculation automatically |
| MOD-030 | Stage allocation model | CALC |
Stage 3 exposure feeds credit risk capital calculation — fully automated link |
| MOD-033 | RWA & capital ratio engine | CALC |
Capital ratios computed from live exposure data — no manual risk weight application |
| MOD-118 | Member equity and share registry | GATE |
Share redemption requests that would reduce CET1 capital below the regulatory minimum are blocked — the redemption queue is held until capital headroom is restored. |
| MOD-165 | Synthetic swap book aggregator | CALC |
IRRBB repricing gap and EVE/NII sensitivity metrics produced by this module feed the capital calculation engine (MOD-033) for the interest-rate risk in the banking book capital requirement; the daily snapshot is the authoritative input for IRRBB RWA contribution. |
Part of Capital & Liquidity · Governance overview
Compiled 2026-05-22 from source/entities/policies/CLQ-001.yaml