Gold and NZ Banks

Will NZ Banks Buy Gold?

Gold Survical Guide

12 September, 2012

Actually, on that last one about bank failures in NZ we just read a story on the NBR site this morning related to this topic.

Reserve Bank sticks to its guns on timing of new bank rules 

Chiefly it was about upcoming changes in capital adequacy ratios to be set by the RBNZ in line with the “so-called Basel III framework, named for the Bank of International Settlements in Basel, Switzerland”. And the fact that this,” is being imposed early in New Zealand, from January 2014”, which is 2 years ahead of Australia.

Interestingly Basel III also looks likely, as we’ve mentioned many times previously, to change gold from a tier 2 to a tier 1 asset, meaning banks can value it at full market value not the 50% of value they must currently. This should encourage banks to actually own gold as opposed to the current rules which effectively discourage it versus the likes of US Treasuries. Wonder if any NZ banks will start to add some gold to their reserves to improve their capital ratios? Hmmm.

Also though, right at the end was a mention that “further announcements are due in coming weeks on the RBNZ's approach to the controversial issue of "open bank resolution" - a proposal to require depositors and bond-holders to take a financial "hair-cut" in the event of a bank failure.” So we’ll be keeping a close eye on this issue that we commented on last year in Bank Failures: Could they happen in NZ? - The Reserve Bank thinks so

 We’ll let you know when we learn more.