New regulations, setting out minimum capital ratio requirements for deposit taking finance companies, building societies and credit unions, have been gazetted and will come into force from December 1.The Deposit Takers (Credit Ratings, Capital Ratios, and
New regulations, setting out minimum capital ratio requirements for deposit taking finance companies, building societies and credit unions, have been gazetted and will come into force from December 1.
The Deposit Takers (Credit Ratings, Capital Ratios, and Related Party Exposures) Regulations 2010 will also limit the amount of credit deposit takers can provide to related parties.
Reserve Bank deputy governor Grant Spencer said that under the regulations deposit takers' minimum capital ratios must not be less than 8 percent if the deposit taker had a credit rating and not less than 10 percent if the deposit taker did not have a credit rating.
Deposit takers' limits on aggregate exposures to related parties must be not more than 15 percent of their capital.
Governance requirements for deposit takers in the Reserve Bank Act would also come into force on December 1. From that date most deposit takers would need to have two independent directors and a non-executive chairperson, Mr Spencer said.
"Overall the regulations will serve to improve investor confidence, as well as promote improved risk management by deposit takers."
