Tougher bank rules

Allan Bollard. Photo / Mark Mitchell

The Reserve Bank has finalised new corporate governance rules for banks designed to strengthen their independence.

Under the changes locally incorporated banks must have a minimum of five people on the board of which at least half must be independent and resident in New Zealand.

It has also tightened the definition of "independent" director and provided guidelines around what knowledge and experience is required from boards. Consultation on changes to banks' conditions of registration, required to bring the changes into effect, will be carried out in the first quarter of 2011, after which a one-year transition period will apply.