Westpac capitulates to NZ demands for local incorporation
16 December 2004 | 3098 views | 0
Westpac Bank is to resubmit proposals to shift its mainframe processing in New Zealand to Australia after capitulating to the NZ Reserve Bank's demands for local incorporation.
Speaking at the bank's AGM in Auckland, Westpac chairman Leon Davis said that Westpac would bow to Reserve Bank demands for local incorporation of systemically important banks in New Zealand. The Australian bank had been opposed to the move, preferring to continue to operate its NZ business as an overseas branch banking operation, but with additional support and safeguards to assuage the central bank.
Says Davis: "Our buttressed branch proposal was given full consideration by the Reserve Bank, but on balance they were not satisfied that it could meet all of their objectives or concerns relating to failure management. While we are disappointed with the decision, we will now move forward as quickly as possible to locally incorporate. We would expect this process to take some time."
Davis says the bank will now put forward a revised proposal to consolidate its mainframe processing in Australia, following an initial rejection of an earlier submission by the Reserve Bank last month.
The Reserve Bank indicated at the time that it would be willing to reconsider the proposal once the decision relating to local incorporation in New Zealand was finalised.
In October, ANZ announced it would take a one-off charge of NZ$31 million in 2005 to cover the costs of exporting mission critical storage and disaster recovery systems to New Zealand under Reserve Bank demands for local oversight.