Westpac acknowledges capital consultation paper by the RBNZ

ASX ANNOUNCEMENT

14 December 2018

Westpac acknowledges the release of a consultation paper by the Reserve Bank of
New Zealand (RBNZ) - Capital Review Paper 4: How much capital is enough?

The RBNZ has today released a new consultation paper to seek the public’s view on a
proposal, to significantly increase the level of regulatory capital in the New Zealand banking
system.

The key proposals include:
• Recalibrating how risk weighted assets (RWA) is calculated for internal ratings based
banks such as Westpac New Zealand Limited (WNZL) such that aggregate RWA
increases to 90% of standardised RWA;
• Setting a Tier 1 capital requirement of 16% of RWA for systemically important banks
(including WNZL) and 15% for all other banks;
• Maintaining the current Tier 2 capital requirement of 2% of RWA, but raise the
question of whether Tier 2 should remain in the capital framework; and
• Staged transition of the different components of the revised framework over 5 years.

The proposed changes aim to further strengthen the NZ banking system to protect the
economy and depositors from bank failure. The deadline for submissions is 29 March 2019.

For the Westpac Group, any change in the capital held by WNZL has no impact on the
Group’s reported regulatory capital ratios on a level 2 basis, which is the primary metric on
which capital ratios are reported.

The impact of any change is difficult to determine on both WNZL’s and the Group’s capital
ratios as the initial proposals will change both Tier 1 capital and RWA.

WNZL is already strongly capitalised with a Tier 1 capital ratio of 14.5% at 30 September
2018.

Westpac will provide a submission to the RBNZ and will update the market once details
become clearer.

For further enquiries, please contact:
David Lording
Head of Media Relations
M. 0419 683 411

Andrew Bowden
Head of Investor Relations
T. 02 8253 4008
M. 0438 284 863