The Reserve Bank has requested an independent report into TSB, after the Taranaki-based bank reported issues concerning its capital and liquidity ratios.
The request comes as Heartland Group shareholders prepare to vote next week on a proposal to acquire TSB from its owner, Toi Foundation.
Consultancy firm Deloitte has been appointed to carry out the independent report.
The Reserve Bank has a key role in overseeing the banking system and, in order to get insight and assurances, has the power under the Banking Act to require a bank to provide an independent report.
The step taken by the Reserve Bank is known as a Section 95 notice, which relates to the relevant part of the Act.
It was taken after TSB advised of issues with the computation and reporting of its capital and liquidity ratios.
A final report from Deloitte is due to the Reserve Bank in November.
Section 95 notices are relatively rare, with only a handful being issued by the Reserve Bank over the last few years.
In a statement to the NZX, Heartland CEO Andrew Dixson said Heartland acknowledged the Section 95 notice and would consider any relevant findings from the independent review as they become available.
“We take regulatory matters very seriously and will consider any relevant findings from the review, including any implications for the Proposed Transaction, as the review progresses,” Dixson said.
Dixson said Heartland continued to believe in the strategic opportunity available through the Proposed Transaction.
However, the note to the NZX also said the proposed transaction remains subject to satisfaction of the remaining conditions, including Heartland shareholder approval, the TSB Material Adverse Change condition, and receipt of the necessary regulatory approvals.
It said this means that if the outcomes of the review are materially different to what is known today, the proposed transaction may not complete, even if Heartland shareholders have approved it.
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