Overview of the New Zealand financial system

This information is designed to provide a broad overview of the structure of the New Zealand financial system and background information for the Financial Stability Report (FSR).1

The Reserve Bank regulates banks, insurers, and non-bank deposit takers (NBDT)2, for the purpose of promoting the maintenance of a sound and efficient financial system. The Bank’s approach to prudential supervision is described in our Statements of supervisory and enforcement approaches. The Bank has no responsibility for non-deposit taking non-bank lending institutions (NBLI) or unlicensed insurers. The Reserve Bank also oversees and operates New Zealand’s financial market infrastructures.

The New Zealand financial system is dominated by the banking sector, with banking assets accounting for a very large share of overall financial system assets (figure 1). In contrast, capital markets are relatively less developed in New Zealand, with total market capitalisation of the New Zealand Stock Exchange around $115 billion, while the domestic bond market is around $115 billion (excluding government debt). The managed fund industry is also small compared to banks, with around $100 billion of assets under management.

Figure 1: Financial institutions’ total assets (as at 30 June 20163)

Figure 1.1 – Financial institutions’ total assets (as at 30 June 2016)

Note: Numbers may not sum due to rounding.

Source: Registered banks’ Disclosure Statements, RBNZ Standard Statistical Return (SSR), Individual Insurer Financial Statements4.


The banking system comprises the majority of lending to the non-financial private sector in New Zealand. Direct capital market funding (issuance of corporate bonds) and non-bank lending institutions (NBLIs) together account for only 5 percent of non-financial private sector borrowing.

Non-bank lending institutions (NBLIs) include non-bank deposit-taking institutions (NBDTs) and non-deposit-taking finance companies. The Reserve Bank of New Zealand regulates NBDTs, but does not regulate or supervise non-deposit-taking finance companies. NBLIs account for just over 2 percent of intermediated credit.

The New Zealand private insurance sector is small by international standards. There are almost 100 licensed insurers currently operating in New Zealand, accounting for approximately $30 billion in assets, or 12 percent of GDP.

Financial market infrastructures (FMIs) provide channels through which payments, securities, derivatives or other financial transactions are cleared, settled or recorded. Well-functioning and efficient FMIs play a critical role in promoting financial stability and economic growth. FMIs can strengthen the markets they serve; if not managed properly, they can pose significant risks to the financial system and be a potential conduit or source of contagion. A stable financial system therefore depends on careful management and mitigation of key risks in the FMIs.


1 This note is intended to provide a high level overview of the structure of the New Zealand financial system, with a key focus on the banking sector. It does not include an extensive discussion of New Zealand financial markets.

2 Non-bank deposit takers include finance companies that take deposits from the public, building societies and credit unions.

3 Total assets are not yet available on a consistent basis for the insurance sector. The value is derived from individual insurer financial statements up to June 2015. Asset values may be accounted for differently across insurers.

4 UDC Finance Limited is included as part of ANZ Bank New Zealand Limited’s total assets and is therefore excluded from the NBLI total asset number.