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Why the ANZ share price is in a trading halt

The Australia and New Zealand Banking Group (ASX: ANZ) share price may not be going anywhere today after the banking giant requested a trading halt this morning.

Why are ANZ’s shares in a trading halt?

This morning ANZ requested that its shares be placed in a trading halt pending the release of an announcement.

It has requested that its shares remain in trading halt until the earlier of the commencement of normal trading on December 6 or when the announcement is released to the market.

The announcement in question is its response to an impending update by the Reserve Bank of New Zealand.

Later this morning New Zealand’s central bank will provide an update on its capital requirements.

What is happening?

Just under a year ago the Reserve Bank of New Zealand announced plans to propose a staged transition of the different components of the revised capital framework over the next five years.

Chief amongst these plans is expected to be a requirement that banks increase the capital buffers of their subsidiaries in the country.

The central bank is making this move as it wants lenders to boost their high-quality capital so they can withstand any massive shocks that come along in the future.

Whilst the big four banks have had plenty of time to prepare for this announcement, the Reserve Bank of New Zealand has been tight-lipped with just how much extra capital will be required.

Today’s announcement is likely to reveal just how much more capital will be necessary to satisfy the central bank and the time frame in which the banks must deliver on this.

In anticipation of the update, ANZ has decided to suspend the trading of its shares. This appears to be a sensible move and would allow the bank to launch a swift capital raising if it is deemed necessary.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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