RBNZ Banking Supervision Handbook: BS1 Statement of Principles
|
|
| Regulator |
Reserve Bank of NZ |
| Jurisdiction |
NZ |
| Status |
live |
| Applicability |
Platform |
BS1 is the RBNZ Banking Supervision Handbook standard governing capital adequacy for registered
banks in New Zealand. It establishes minimum regulatory capital ratios, buffer requirements, and
the framework for calculating risk-weighted assets (RWA) under standardised and internal
ratings-based (IRB) approaches. BS1 conditions of registration require banks to maintain minimum
Common Equity Tier 1 (CET1) of 4.5%, with an additional capital conservation buffer of 2.5%
and a countercyclical capital buffer (CCyB) as set by the RBNZ from time to time. Domestically
Systemically Important Banks (D-SIBs) carry an additional surcharge. Tier 1 and Total Capital
minimums are 6% and 8% respectively, before buffers.
BS1 is being superseded by the DTA Capital Standard, which takes effect
1 December 2028. Until that date, BS1 remains the operative capital adequacy requirement for
registered banks. The platform's capital engine (MOD-033) is built against the DTA standard and
is backward-compatible with BS1 ratio calculations.
Compliance register
This register maps every material obligation under BS1 to the platform control or institutional
process that satisfies it. It is the static traceability layer for the Totara compliance report —
dynamic data (module build status, test evidence, control test dates) is overlaid at runtime.
Scope legend
| Symbol |
Meaning |
| 🤖 Automated |
Platform enforces or performs the obligation. Primary control mode is GATE, AUTO, CALC, or ALERT. Human action is not required in the normal case. |
| 📊 Evidenced |
Platform captures the evidence trail automatically. Human compliance decision sits on top. Primary control mode is LOG. |
| 🏛 Institutional |
Obligation is met by a process entirely outside the platform — board governance, treasury, legal. Platform may generate evidence inputs but does not own the process. |
| N/A |
Obligation does not apply to this deployment configuration. |
Build legend
| Symbol |
Meaning |
| ✅ |
Module built and deployed |
| 🔨 |
Module planned — not yet built (build_status: Not started) |
| ❌ |
Uncontrolled gap — no module attributed |
Capital ratio requirements
| Ref |
Obligation |
Scope |
Policy |
Platform controls |
Build |
| BS1 §4 |
Maintain minimum CET1 ratio of 4.5% of RWA on an ongoing basis |
🤖 Automated |
CLQ-001 |
MOD-033 (CALC) — CET1 ratio computed continuously from live exposure data; no manual risk weight application; MOD-033 (ALERT) — CET1 breach of minimum threshold triggers automatic Board notification |
🔨 |
| BS1 §4 |
Maintain minimum Tier 1 ratio of 6% and Total Capital ratio of 8% |
🤖 Automated |
CLQ-001 |
MOD-033 (CALC) — Tier 1 and Total Capital ratios computed in the same RWA engine run as CET1 |
🔨 |
| BS1 §4 |
Maintain capital conservation buffer of 2.5% above minimum CET1 |
🤖 Automated |
CLQ-001 |
MOD-033 (CALC) — buffer headroom monitored continuously; ALERT fires before the combined buffer is breached, providing time to act |
🔨 |
| BS1 §4 |
Maintain countercyclical capital buffer (CCyB) at the RBNZ-set rate |
🤖 Automated |
CLQ-001 |
MOD-033 (CALC) — CCyB rate loaded from regulatory configuration; ratio updated automatically when RBNZ revises the rate |
🔨 |
| BS1 §4 |
D-SIB surcharge where designated — additional CET1 above the base requirement |
N/A |
— |
Totara Bank is not currently designated as a D-SIB. This obligation will be activated in MOD-033 configuration if designation occurs. |
— |
RWA calculation
| Ref |
Obligation |
Scope |
Policy |
Platform controls |
Build |
| BS1 §5 |
Calculate RWA for credit risk under the standardised approach — apply prescribed risk weights by asset class |
🤖 Automated |
CLQ-001 |
MOD-033 (CALC) — standardised risk weights applied to all credit exposures; asset class classification automated from product and counterparty attributes |
🔨 |
| BS1 §5 |
Calculate RWA for operational risk — basic indicator approach (15% of gross income) or standardised approach |
🤖 Automated |
CLQ-001 |
MOD-033 (CALC) — operational risk capital charge calculated from gross income data fed by the core ledger |
🔨 |
| BS1 §5 |
Calculate RWA for market risk on trading book positions |
🤖 Automated |
CLQ-001 |
MOD-033 (CALC) — market risk capital charge computed from trading book positions; MOD-035 (CALC) — IRRBB and market risk sensitivities feed the RWA calculation |
🔨 |
| BS1 §5 |
IRB approach — accredited banks may use internal models for credit risk RWA with RBNZ approval |
N/A |
— |
Totara Bank will use the standardised approach. IRB accreditation is not part of the current programme. |
— |
Capital reporting and disclosure
| Ref |
Obligation |
Scope |
Policy |
Platform controls |
Build |
| BS1 §7 |
Report capital ratios to RBNZ on the prescribed schedule |
🤖 Automated |
CLQ-001 |
MOD-036 (AUTO) — RBNZ BS capital returns populated from the same RWA engine that drives internal monitoring; no separate manual extraction |
🔨 |
| BS1 §7 |
Disclose capital adequacy information in quarterly disclosure statements (BS3B/BS3C) |
🤖 Automated |
CLQ-001 |
MOD-036 (AUTO) — capital disclosure figures sourced directly from MOD-033 output |
🔨 |
| BS1 §8 |
Notify RBNZ promptly of any breach or anticipated breach of minimum capital ratios |
🤖 Automated |
CLQ-001 |
MOD-033 (ALERT) — ALERT fires automatically when CET1 approaches minimum, giving the institution advance notice; MOD-036 (AUTO) — notification workflow triggered from alert |
🔨 |
Capital planning and stress testing
| Ref |
Obligation |
Scope |
Policy |
Platform controls |
Build |
| BS1 §9 |
Maintain an Internal Capital Adequacy Assessment Process (ICAAP) — document capital needs against risk profile |
📊 Evidenced |
CLQ-003 |
MOD-034 (CALC) — stress test engine documents scenario inputs, model version, and results with full audit trail; output forms the quantitative ICAAP evidence base |
🔨 |
| BS1 §9 |
Capital stress testing — project capital ratios under adverse scenarios |
🤖 Automated |
CLQ-003 |
MOD-034 (CALC) — stress scenarios run against current RWA base from MOD-033; capital ratio projections under prescribed and internal scenarios computed automatically |
🔨 |
| BS1 §9 |
Board approval of capital plan and ICAAP |
🏛 Institutional |
CLQ-003 |
Board approves the ICAAP document. MOD-034 provides the quantitative base; MOD-150 (CALC) — RAF dashboard surfaces capital headroom to the Board Risk Committee. |
— |
| Obligation |
Owner |
Platform evidence input |
| Board approval of capital adequacy policy and RAF |
Board |
MOD-033 provides live capital ratio data for board reporting; MOD-150 provides RAF dashboard |
| ICAAP document preparation and board sign-off |
CFO / CRO |
MOD-034 provides stress test outputs; MOD-036 provides RBNZ return data |
| RBNZ engagement on CCyB changes and D-SIB designation |
CFO / CEO |
MOD-033 configuration updated on RBNZ instruction |
| External audit of capital disclosure |
External Auditor |
MOD-036 provides the auditable data lineage from source ledger to return |
Coverage summary
| Area |
Total obligations |
Platform automated 🤖 |
Platform evidenced 📊 |
Institutional 🏛 |
N/A |
| Capital ratio requirements |
5 |
4 |
0 |
0 |
1 |
| RWA calculation |
4 |
3 |
0 |
0 |
1 |
| Reporting and disclosure |
3 |
3 |
0 |
0 |
0 |
| Capital planning |
3 |
1 |
1 |
1 |
0 |
| Total |
15 |
11 (73%) |
1 (7%) |
1 (7%) |
2 (13%) |
All attributed modules are currently build_status: Not started. The compliance position will
update as modules are built and deployed. The DTA Capital Standard (effective 1 December 2028)
supersedes BS1 — see nz-dta-capital for the forward obligation register.
| Policy |
Title |
| CLQ-001 |
Capital Adequacy Policy |
| CLQ-003 |
Capital Planning & Stress Testing Policy |
See D01 Capital & Liquidity for the full risk domain.
Official documentation
Policies referencing this standard
(None yet)
Compiled 2026-05-22 from source/entities/regulations/nz-bs1.yaml