NZ Banks Face $113m Prudential Levy Over Three Years

The Reserve Bank of New Zealand (RBNZ) has proposed a prudential regulation tax, which would charge banks and other deposit takers $113 million over three years. The tax is part of the government's plan to shift the cost of regulating financial institutions from taxpayers to industry participants.

Under the proposal, deposit takers, insurers, and key financial market infrastructure providers would be required to pay a user-pays levy. Deposit takers would bear the largest burden, accounting for 54% of the total amount raised, while insurers would contribute 39%. Financial markets infrastructure providers would make up the remaining 7%.

The RBNZ estimates that ANZ NZ, with $219 billion in assets, would pay around $10 million annually. IAG NZ, the country's largest insurer, could face an annual levy of over $5 million.

According to the consultation paper, a full cost recovery model is preferred by the RBNZ, which would require industry participants to cover all costs incurred in regulating and supervising their sector. This approach is consistent with international practice for prudential levies.