wellygary:gzt: : Answering my own question after some googling nz banks were freed from any quantitative restrictions on their lending to paid capital ratios.
Not true, nz banks have both capital and funding ratios
This is ultimately what it comes down to. The entire banking industry is built around one concept - risk.
Reading between the lines the RBNZ are seemingly wanting banks to carry more capital or reduce exposure. The easiest way to do this is reduce exposure and lower the risk.