The Reserve Bank of New Zealand required TSB to commission an independent report after the bank identified problems in the computation and reporting of its capital and liquidity ratios. TSB said the regulator issued the notice on 18 September under Section 95 of the Banking (Prudential Supervision) Act 1989. Deloitte has been appointed to prepare the report, with a draft due at the end of October and a final version due to the central bank in November.
The notice requires independent assurance over TSB’s compliance with prudential requirements covering liquidity, capital adequacy and regulatory reporting. The bank said its current liquidity and funding positions were sound and that it remained well capitalised. It said the review would provide an additional level of independent assurance as it prepares for the proposed merger with Heartland Bank.
CAPITAL AND LIQUIDITY ERRORS
Interest.co.nz reported that TSB’s March 2026 general disclosure statement described a historical error in the classification of some funding balances for regulatory liquidity calculations. The bank said the error meant it had not complied with a condition of registration since the liquidity requirements took effect in 2010, although its reported liquidity ratios remained above the regulatory minima throughout. The report also cited TSB’s earlier disclosure of errors in risk-weighted assets and regulatory capital calculations identified in 2019.
TSB said those capital adequacy calculation issues were resolved by 30 September 2025 and that prior-year figures were not restated because the impact was immaterial. RBNZ said Section 95 reports form part of its supervisory toolkit and provide independent assurance and insight about banks’ systems and practices; it declined further comment because the prudential matter is ongoing.
MERGER TIMETABLE FACES REVIEW
Heartland Group Holdings said the review relates to TSB but acknowledged that its findings could affect the proposed acquisition and merger. The transaction still requires Heartland shareholder approval, satisfaction of a TSB material-adverse-change condition and the necessary regulatory approvals. Heartland said the deal may not complete if the review produces outcomes materially different from what is currently known.
Heartland’s special shareholder meeting is scheduled for 30 September, while Deloitte’s final assurance report is not due until November. The next milestones are the shareholder vote and RBNZ’s receipt of Deloitte’s final report.