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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 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.
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|
|BBB+/Baa1 and below||15|