(Updates with details, Westpac statement)
By Paulina Duran
SYDNEY, Nov 15 (Reuters) - Westpac Banking Corp’s New Zealand unit has breached capital requirements, New Zealand’s central bank said on Wednesday, ordering the lender to keep higher capital levels than other banks until it fixes the issues.
The breaches related to the way Westpac attributed credit risk ratings to assets at its subsidiary Westpac New Zealand Ltd (WNZL), the Reserve Bank of New Zealand (RBNZ) said in a statement.
Westpac, Australia’s second biggest lender by market capitalisation, said its unit was disappointed it did not meet the RBNZ’s requirements in this area and noted the breaches had been disclosed in 2016.
“WNZL acknowledges the high standards required ... and has already taken several steps to address the issues raised,” it said.
The central bank said it had ordered Westpac to increase its minimum capital levels until it had rectified its non-compliance.
From December, WNZL must keep 6.5 percent in common equity tier 1 capital, and 10 percent total regulatory capital, higher than the 4.5 percent and 8 percent required of other banks in the country, it said, adding that the bank had agreed to maintain the unit’s total capital ratio above 15.1 percent.
Westpac said it was already well above those requirements, with 11.1 percent common equity tier 1 capital and 16.1 percent in total regulatory capital at the end of September.
Shares in dipped 0.3 percent in early afternoon trade, in line with a decline in the broader market.
Reporting by Paulina Duran; Editing by Byron Kaye and Richard Pullin