RBNZ grants exemptions to finance companies

UDC Finance is exempted from meeting requirements under the capital ratio, related party and governance requirements until May 31, 2011. Such exemptions are further carried until December 1 2015 but they are subject to UDC Finance meeting alternative capital and related-party exposure requirements by June 1, 2011.

UDC Finance's related party exposures are mainly with parent ANZ National Bank as the finance unit deploys cash and short term funds with the bank. It also has smaller liabilities with other members of the ANZ group.

The new regulations include requirements on minimum capital ratio, restrictions on related party exposures and the existing credit rating norms. Other requirements relate to liquidity norms which state that the Trust deed must state the liquidity requirements. There are also governance requirements to be met that pertain to the presence of at least two independent directors in case of companies or building societies.

Fisher & Paykel is another major finance company to have been granted an exemption but that's confined to governance requirement. The exemption doesn't have an end date but is subject to the condition that Fisher & Paykel Finance maintains alternative governance arrangements.