Westpac New Zealand is making progress in cleaning up its systems and management surrounding risks and its financial base, but needs to keep making progress, according the Reserve Bank.
Photo: RNZ / Nate McKinnon
The Australian owned bank got into the RBNZ's bad books last year for not properly complying with banking rules, and shortcomings in its risk management policies and procedures, which led to the central bank ordering two reports on the gaps and measures being taken to rectify and improve.
A report by consultancy Deloitte and released by the RBNZ said Westpac was "moving in the right direction".
"We are encouraged to see that Westpac NZ has taken the necessary steps to improve its liquidity risk management and risk culture by increasing its resourcing and improving its governance processes," RBNZ deputy governor Christian Hawkesby said.
"We expect that the momentum built to date will allow Westpac NZ to continue the overall transition from a reactive, to a proactive risk culture."
Banks are required to meet certain levels of liquidity to cover potential demands on their finances, and are required to have approved systems in place to assess the risks.
A report released last November called into question the competence of the Westpac NZ board and pointing to "material shortcomings" in governance.
Westpac has refreshed its board with new directors, and appointed a new chief executive, Catherine McGrath.
However, the RBNZ reaffirmed its confidence in Westpac's financial strength.
"We ... maintain our assessment that Westpac NZ's financial position is sound," Hawkesby said.
McGrath said the Deloitte report had shown the improvements that had been made, and the bank's current liquidity and funding positions were sound.
"However, we agree that further refinements can be made, and we'll be building that into our continuous improvement activity."