Australian-owned banks operating in New Zealand are being required to meet new global capital adequacy rules two years ahead of their trans-Tasman parents.The Reserve Bank of New Zealand rejected submissions from banks that they should have until January 2016 to get ready for new capital adequacy rules that are being imposed in the wake of the global financial crisis.The RBNZ will adopt the Basel III framework from January 2014.The bank regulator has also held firm on its intention to move to a "counter-cyclical buffer" approach to capital adequacy from 2014, despite several banks fearing they can't prepare in time for a new regime requiring them to ramp capital up and down in response to central bank judgements about the emergence of credit booms or busts.The counter-cyclical buffer is being proposed as a new, slow-acting instrument of monetary policy which will require a 12-month warning to allow banks to reorder their balance sheets to meet the buffer's requirements.The central bank rejected calls for an earlier warning and for the counter-cyclical buffer to be set no higher than 2.5 percent of risk-weighted assets."A longer notice period runs the risk that the countercyclical buffer is built up too late," the bank said in a summary of its response to submissions on the Basel III rules, which were communicated to banks in May. "In the context of a credit boom it is likely that capital can be raised reasonably easily and even if it could not the bank would simply face restrictions on distributions," said the RBNZ. "Dialogue with banks and public signalling of our unease about credit developments" would come ahead of a formal trigger announcement.On the 2.5 percent upper limit for the buffer, the RBNZ said that "no formal limit on the maximum size of the buffer is appropriate for New Zealand" because of the lack of experience calibrating the new instrument, and "retaining an open-ended maximum may be useful in conditioning bank incentives against excessive credit growth."The RBNZ "acknowledges that further work is needed on the countercyclical buffer framework in relation to financial indicators as well as governance and accountability arrangements for the operation of the buffer.""However we consider this work can be undertaken in sufficient time to allow the implementation of the countercyclical buffer in 2014."Further announcements are expected in coming weeks on the RBNZ's approach to the issue of "open bank resolution" - a proposal to require depositors and bond-holders to take a financial "hair-cut" in the event of a bank failure.BusinessDesk