Regulatory Alerts2022-05-17
Reserve Bank of New Zealand Connected Exposures Policy (BS8)
The Reserve Bank of New Zealand issued document BS8 to establish standard conditions of registration regarding exposure to connected persons for locally incorporated banks. The policy mandates that capital nature advances be deducted from Tier 1 capital and limits aggregate credit exposures to connected persons based on the bank's credit rating, with a strict cap of 15 percent for non-bank connected entities. Additionally, the document defines substantial interest and connected persons, permits netting under robust industry standards, and requires that exposures to connected persons not be on more favourable terms than those to non-connected persons.
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