The Reserve Bank of New Zealand and the Australian Prudential Regulation Authority have finalized a cross-Tasman large bank stress test.

The Reserve Bank of New Zealand website announcement stated that the bank has confirmed that it will conduct a joint stress test with the Australian Prudential Regulation Authority across the Tasman region. The test will cover the four major domestic banks in New Zealand: ANZ Bank New Zealand Branch, ASB Bank, Bank of New Zealand, Westpac New Zealand Branch, and their Australian parent banks. Under the stress scenario assumptions: a long-term geopolitical conflict erupts in the Middle East, the Strait of Hormuz is effectively closed, and oil prices surge to $160 per barrel; major global economies experience a significant slowdown, with global economic recovery only beginning three years later in a slow and staggered manner; New Zealand is dragged down by soaring energy and fertilizer costs, leading to a sharp inflation surpassing policy targets, official cash rates peak at 4%, and the domestic economy falls into recession: GDP shrinks by 5.7%, unemployment rises to 10.5%; widespread credit rating downgrades occur in the market, along with large corporate debt defaults. Each bank will calculate the impact of the above scenario on its own capital over the next five years. The purpose of this test is to verify the banks' capital resilience, improve the risk-sharing mechanisms between parent and subsidiary banks, and provide reference for regulatory risk assessment, with the test results expected to be released in November.