WELLINGTON, Sept. 20 (Xinhua) -- The Reserve Bank of New Zealand on Wednesday published a revised outsourcing policy for large banks, aiming to ensure that a bank can continue to operate in a situation where a key service provider fails.
Deputy Governor Grant Spencer said in a statement that the revision of the outsourcing policy follows a review by the Reserve Bank, which concluded that greater clarity of the policy and more consistency of application by banks would be desirable to ensure that they can continue to provide required services in times of stress.
The revised policy sets requirements that banks need to meet when outsourcing particular functions and services, especially if the service provider is a related party of the bank.
"An ongoing ability by banks to provide liquidity and basic services to customers, even in times of stress, is an important part of maintaining a sound and efficient financial system," Spencer said.
Under the revised policy, banks are required to ensure that a range of resolution options, including open bank resolution, are available in the unlikely event of a bank failure, which supports financial stability in times of stress, he said.
It applies to locally-incorporated registered banks with net liabilities of more than 10 billion NZ dollars (7.36 billion U.S. dollars), and comes into force on Oct. 1, Spencer said, adding that affected banks will have five years to come into compliance with the revised policy, which replaces an earlier policy introduced in 2006.
He said the Reserve Bank would work with banks to ensure a practical path to compliance with the policy within the five-year deadline.
