The Reserve Bank of New Zealand has acknowledged that IAG’s takeover of Lumley NZ is significant for the country’s insurance market, but has not confirmed when it will make a decision on the proposal.

The bank has 20 days to approve or reject the deal, but the clock only begins ticking when it has received all relevant information, and it will not confirm whether this has happened.

IAG MD and CEO Mike Wilkins has said the group expects the transaction to be completed by June 30.

The takeover is controversial in New Zealand because of the market share it will give IAG, but the Commerce Commission – which was considered the most likely stumbling block – has approved it. Now only the Reserve Bank’s backing is required.

The bank’s May report says the takeover “is significant for the New Zealand insurance market because IAG group is already the largest general insurance group in New Zealand through its ownership of IAG New Zealand and AMI Insurance”.

Buying Lumley would give IAG about 50% of the general insurance market and about two-thirds of the home and contents segment.

The bank is not expected to find any prudential regulation issues, but the bulletin says it will consider whether Lumley continues to meet licence criteria and will review licence conditions. The conditions focus on whether a company has the financial capacity and the ability to operate an insurance business.

The Australian Prudential Regulation Authority and Federal Treasurer Joe Hockey still have to approve the acquisition of the Wesfarmers insurance assets in Australia.