The senior creditors of New Zealand's four largest banks are expected to benefit from resolution debt buffers built by their Australian parents once New Zealand regulators allow for the issuance of loss-absorbing capacity (LAC) instruments, Fitch Ratings said Thursday.

The Reserve Bank of New Zealand's new capital framework mandates internal issuance of LAC instruments to the Australian parents, supporting a single point of entry approach to resolution.

"We believe the placement of such instruments would provide a mechanism for the New Zealand subsidiaries to access the LAC buffers raised by their parents, reinforcing the subsidiaries' position within the parent banks' broader resolution groups," the ratings agency said.

As such, Fitch has revised the outlooks on ANZ Group Holdings (ASX:ANZ, NZE:ANZ) unit ANZ Bank New Zealand, Commonwealth Bank of Australia (ASX:CBA) unit ASB Bank, Westpac Banking (ASX:WBC, NZE:WBC) unit Westpac New Zealand, and Bank of New Zealand to positive from stable.

It added that New Zealand regulators are likely to allow for the issuance of LAC instruments by late 2028.