Reserve Bank of New Zealand reforms financial naming rules
Sydney (4 June)
The Reserve Bank of New Zealand (RBNZ) has reformed financial sector naming rules to allow credit unions, building societies, and some other deposit holders to call themselves banks, in a bid to improve competition.
But managed funds that accept deposits will not be able to call themselves banks when the new rules take effect in 2028, RBNZ said on 4 June.
Most banks and non-bank deposit takers in New Zealand are regulated under the same risk and deposit protection frameworks. But credit unions and building societies are financial cooperatives, owned and governed by their members.
The New Zealand Banking Association (NZBA) – an industrial group that represents New Zealand’s largest banks, including ANZ, Westpac, ASB, and BNZ – has responded positively to RBNZ’s reforms.
“Most people know what a bank is but may not be clear on what a deposit taker is, so it makes sense that businesses providing banking services call themselves banks so long as they are subject to the same high regulatory standards as traditional banks,” NZBA Chief Executive Roger Beaumont told Lithos.
“Our banks also welcome competition, even though this change is over two years away,” Beaumont added.
Parliament’s multi-party Finance and Expenditure Committee backed competition reforms and found that the New Zealand banking sector lacked competition in a August 2025 report.
“There is no observable tendency towards strong competition [in New Zealand’s banking sector] and the [sector] has sustained high levels of profitability relative to international peers,” the Committee said.
The Committee recommended that the Government reduce barriers to entry and expansion, reduce regulatory duplication, and reduce compliance costs for financial technology firms, among other things, in its report.
RBNZ’s changes come days after Heartland Bank and TSB, a pair of primarily regional banks, announced plans to merge into TSB Heartland Bank. The merged bank will focus on improving regional banking competition, Heartland Bank told investors.
New Zealand’s four largest banks – ANZ, ASB, BNZ, and Westpac – own 90% of the country’s banking assets, the New Zealand Commerce Commission said in 2024.
By Avinash Govind