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Deposit Takers Act 2023

Regulation of deposit takers - Standards - Subject matter of standards

80: Bail-in standards

You could also call this:

"Rules for banks to follow when dealing with special financial products called 'bail-in instruments'"

Illustration for Deposit Takers Act 2023

The law says a standard can be made about bail-in instruments, which is called a bail-in standard. You can think of a bail-in standard as a set of rules that licensed deposit takers must follow when dealing with bail-in instruments. A bail-in standard can say what kinds of bail-in instruments a licensed deposit taker must use.

A bail-in standard can also say what must be included in those bail-in instruments, like the terms and conditions. It can specify when certain things must happen, such as when a licensed deposit taker must offer or arrange bail-in instruments. It can even say how much money must be raised or owed when using bail-in instruments.

The law also says what a bail-in instrument is - it's a financial product or agreement that can be changed in certain ways. For example, it can be converted into a different type of financial product, or the amount owed can be reduced or cancelled. The time for payment can also be extended, or the terms and conditions can be changed in other ways. The Reserve Bank can give directions or notices that trigger these changes, as outlined in subpart 3 of Part 7.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS557736.

Topics:
Money and consumer rights > Banking and loansBusiness > Industry rules
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Part 3Regulation of deposit takers
Standards: Subject matter of standards

80Bail-in standards

  1. A standard may regulate, deal with, or otherwise relate to bail-in instruments (a bail-in standard).

  2. A bail-in standard may (without limitation) do 1 or more of the following:

  3. require a licensed deposit taker (A) to issue, enter into, or be a party to 1 or more kinds of bail-in instruments:
    1. specify the terms and conditions that must be included in those bail-in instruments:
      1. specify the events or other circumstances in which the matters in subsection (4)(a), (b), (c), or (d) occur:
        1. specify the manner in which those bail-in instruments must be offered, entered into, or arranged:
          1. provide for how much must be raised in connection with those bail-in instruments and how much must be owed in connection with those bail-in instruments.

            1. The events or circumstances under subsection (2)(c) may include either or both of the following:

            2. the Bank giving a direction under subpart 3 of Part 7:
              1. the Bank giving a notice to A.

                1. A bail-in instrument is a financial product or any other agreement the terms and conditions of which provide for 1 or more of the following:

                2. the financial product or any rights or interests in connection with the agreement to be converted into, or exchanged for, 1 or more equity securities (or some other financial product) of A or of a subsidiary of A:
                  1. the reduction or cancellation of an amount owing under the financial product or agreement (in whole or in part):
                    1. the extension of the time for payment of an amount owing under the financial product or agreement (in whole or in part):
                      1. any other variation of the terms and conditions of the financial product or agreement.