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Connected exposures policy for banks

New Zealand-incorporated registered banks are subject to limits on the level of credit exposure they have to their connected persons.

What is a connected person

The term ‘connected person' is defined in the October 2023 Connected Exposures Policy (BS8) and includes a person who is:

  • an entity which has control of the registered bank, or
  • a person which has a significant influence over the registered bank, or
  • a director or senior manager of the registered bank or of any person who has control of the registered bank, or
  • other persons as defined in the policy.

The Connected Exposures Policy (BS8) is available on the Banking Prudential Requirements page.

Go to the Banking Prudential Requirements page

Aggregate credit exposure limit

Aggregate credit exposures to non-bank connected persons shall not exceed 15% of the banking group's tier 1 capital.

Aggregate credit exposures to all connected persons — that is, banks and non-banks — shall not exceed the rating-contingent limit outlined in the following matrix.

Credit rating Connected exposure limit 
(% tier 1 capital)
AA/Aa2 and above 75
AA-/Aa3 70
A+/A1 60
A/A2 40
A-/A3 30
BBB+/Baa1 and below 15