The Reserve Bank has increased its supervisory monitoring of the Bank of New Zealand (BNZ) requiring the bank to provide an extra $250 million in supervisory capital overlay.
A statement from the Reserve Bank today outlined why they have made the decision.
"BNZ identified a number of errors while undertaking a programme of remediation, which began in early 2018 and is expected to continue into 2020.
"These included three capital calculation errors, which resulted in misreported risk weighted assets over a number of years.
"It is now required to increase the risk weight floor of its operational risk capital model from $350 million to $600 million capital. The $250m increase is a supervisory capital overlay," part of the statement reads.
Deputy Governor Geoff Bascand says the capital overlay will be removed from the BNZ once remediation is complete.
“We are reassured by BNZ’s response to the issues along with the independent oversight from PWC,” Mr Bascand says.
“BNZ has committed to providing the Reserve Bank with regular and timely updates of the details of issues as they are discovered and the remedial activity as this work progresses."