New Zealand unveils corporate governance rules for banks

A new set of corporate governance requirements for financial institutions has been issued by the Reserve Bank of New Zealand.

Published following a consultation period that began in June this year, the guidelines impose a minimum board size of five and require at least half of the directors to be independent.

In addition, 50 per cent or more of a board's independent directors must now be New Zealand residents.

"The governance changes are aimed at reinforcing the expectation that overseas-owned, locally-incorporated banks will operate independently, in a way more likely to protect New Zealand's financial stability," said the Reserve Bank's deputy governor Grant Spencer.

He added that the central bank does not expect significant alterations to be made to existing boards as a result of the new guidelines.

Earlier this month, the Reserve Bank published a consultation paper proposing that banks be required to obtain a notice of non-objection from the central body before going ahead with significant mergers and acquisitions.