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New Zealand central bank plans stricter rules governing bank boards

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New Zealand central bank plans stricter rules governing bank boards

The Reserve Bank of New Zealand is planning to implement stricter rules around the appointment and role of bank directors, The New Zealand Herald reported June 11, citing a document seen by the publication.

Initiatives include limiting the duration an independent bank director can stay on the board and the number of directorships a director can hold at one time, according to the report.

Banks will be required to conduct ongoing suitability assessments of their directors and senior managers, as well as appoint directors with certain financial sector experience. A training program with the Institute of Directors is also planned.

New Zealand's central bank has devised the rules following criticism of its so-called attestation regime, whereby it relies on bank directors to attest how much a bank complies with regulations. It does not require an external audit or verification.

The central bank said it reviewed the attestation process in 2017 and has subsequently increased its engagement with bank boards, the publication reported.