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 Connected Exposures Policy (BS8) to be a person who is:
- an owner, or
- an entity in which an owner has a substantial interest, or
- a person which has a substantial interest in an owner, or
- a director of the registered bank.
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 |