The Reserve Bank of New Zealand is proposing six changes to banking capital rules, potentially changing how lenders assess the regulatory capital required for different types of loans. The proposals cover credit cards, commercial property, large public infrastructure projects and reverse residential mortgages. The consultation closes at 5pm on Tuesday, 1 December 2026.
According to the Reserve Bank's October newsletter, the objective is to make capital requirements more closely reflect the risks associated with different lending activities. Risk weights help determine the amount of capital a bank must hold against its exposures, so changes to them alter the capital needed for each loan type. The proposals were published in Issue 13 of the Deposit Takers newsletter in October 2026.
FOUR LENDING AREAS FACE REVISED RISK WEIGHTS
One proposal would lower the regulatory risk weight applied to credit card lending. Another introduces specific risk weights for eligible large domestic public infrastructure projects. The Reserve Bank is also proposing more detailed risk weights for commercial property lending.
The consultation also proposes a lower risk weight for reverse residential mortgages with low loan-to-value ratios. Reverse mortgages allow eligible homeowners, often older people, to borrow against the value of their property.
COMMERCIAL PROPERTY GETS A SPECIFIC TREATMENT
The standardised approach does not currently include a specific treatment for commercial property lending, which the Reserve Bank defines as the financing of non-residential property. The proposed risk weights would therefore add detail where the framework is currently silent.
In its consultation material, the Reserve Bank notes that over the past 25 years New Zealand has experienced high property price growth, averaging 6.5% per year.
FOLLOW-UP TO THE 2025 CAPITAL REVIEW
The proposals are part of the implementation of the Deposit Takers Act 2023 and follow a wider review of capital settings in 2025. On 17 December 2025 the Reserve Bank announced final decisions on key capital settings for deposit takers, and on 27 February 2026 it released additional background material. Locally incorporated banks have operated under the Basel 2 framework since the first quarter of 2008.
The same newsletter updates the Act's implementation. The Reserve Bank has published near-final standards and guidance covering liquidity, the Depositor Compensation Scheme, lending and incorporation outside New Zealand, and expects further material on governance, risk management, reporting and other requirements before the end of 2026. It also confirmed that all Depositor Compensation Scheme levy invoices for the 2025/26 financial year were paid by the due date, and described the developments as part of the broader transition to the new regulatory framework for deposit takers.
SUBMISSIONS THEN FINAL DECISIONS
The Reserve Bank will consider submissions before making final decisions and incorporating any changes into its Capital Standard. Submissions are due by 5pm on 1 December 2026.