Regulatory Alerts2022-05-17
BS 8 - Connected Exposures Policy
The Reserve Bank of New Zealand issued document BS8 to establish standard conditions of registration for locally incorporated banks regarding exposures to connected persons. The policy mandates that aggregate credit exposures to connected persons must not exceed a rating-contingent limit based on the bank's Tier 1 capital, with capital nature advances deducted from that capital. Additionally, the document defines connected persons and substantial interests, prohibits more favorable lending terms for connected parties, and sets a maximum aggregate gross exposure limit of 125% of Tier 1 capital.
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