"APRA’s announcement today means,all else being equal,ANZ could have limited capacity to inject capital into ANZ NZ,"ANZ said.
"As a result,ANZ NZ may be required to retain a higher proportion of its earnings to meet any potential increased capital requirements and any future capital required in New Zealand may also need to be held at a group level."
The question is what the RBNZ will do when they come up with their capital reforms.
Bell Potter's TS Lim
APRA said it might consider"transition arrangements"for affected banks if they request them. ANZ shares fell 0.15 per cent to $26.68,as other big bank shares rose or were flat.
Shaw and Partners banking analyst Brett Le Mesurier said APRA's ruling would reduce the flexibility of ANZ to allocate capital between the two countries. It would mean that ANZ's Kiwi business would need to build up capital from retained earnings made across the Tasman.
"They[APRA] are really saying to the New Zealanders:'If you want the Australian subsidiaries operating in New Zealand to hold more capital,well at least in the case of ANZ,they will have to generate it out of the profits of New Zealand',"Mr Le Mesurier said.
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Bell Potter analyst TS Lim said the change from APRA would make it more difficult for ANZ to repatriate dividends across the Tasman,as it has done in the past.
Mr Lim said the changes may also prompt ANZ to manage returns in NZ more tightly,which could include streamlining the business or being more cautious.
"The question is what the RBNZ will do when they come up with their capital reforms,"Mr Lim said.
ANZ said the overall impact of the various changes to capital rules would depend on the RBNZ's final ruling on capital requirements,which is due in November.
APRA's deputy chairman John Lonsdale said the changes were aimed at stopping risks in one part of a bank — such as an overseas subsidiary — spreading more widely.
"As we saw during the global financial crisis,deficiencies in governance or internal controls in one part of a corporate group can quickly spread and cause financial or reputational damage to an[authorised deposit-taking institution],"Mr Lonsdale said.
Commonwealth Bank said it had had enough capital under APRA's reduced limits to accommodate its exposure to its NZ subsidiary,including with the extra capital requirements proposed by the RBNZ.
The APRA change did not trigger ASX announcements from National Australia Bank or Westpac.