Government introduces new levy on banks, non-bank deposit takers, insurers and financial market infrastructure providers which is estimated to raise $209 million over the next four years

The Government is introducing a prudential levy on banks, non-bank deposit takers, insurers and financial market infrastructure providers.

This announcement was made as part of Budget 2026 with Finance Minister Nicola Willis saying the levy would help cover the cost of services provided by the Reserve Bank (RBNZ).

The levy would enable cost recovery for the RBNZ’s statutory prudential functions and would support a sustainable, industry-funded regulatory framework, according to Budget 2026’s summary of initiatives.

Willis says the levy is estimated to recover around $209 million over the next four years.

Willis says this is a “modest” prudential levy and she had looked at other measures but this was not agreed on by other coalition parties.

Broken down, the Budget 2026’s summary of initiatives suggests from 2027/2028, there would be a cost recovery of $68.1 million, $69.5 million in 2028/2029 and $70.9 million in 2029/2030.

According to the Government, the revenue from the new levy would be less than 1% of the total profits of the big four banks – ANZ, ASB, Westpac and ANZ – alone.

“The levy will be paid to the Reserve Bank, with the revenue returned to the Government through an increased dividend.”

Following the Budget, the Reserve Bank will start consulting with the banking sector and Cabinet aims to make decisions on this in early 2027 with the aim of having the levy introduced in mid-2027.

Willis says having a prudential levy is consistent with international practice in places like Australia, Canada and the United Kingdom.

“In a more unstable world, it’s important we strengthen the financial system, so it keeps working for Kiwis when times get tough.”

According to the Government, there’s 27 registered banks, 14 licensed non-deposit takers in New Zealand, five designated financial market infrastructure providers and 81 licensed insurers in New Zealand.