Revealed: Why Reserve Bank governor Adrian Orr suddenly quit

The Reserve Bank has revealed more details behind the shock resignation of former governor Adrian Orr in March, which has now been attributed to a major disagreement over the central bank's funding.

Finance Minister Nicola Willis and bank officials have been tight-lipped for months over the departure of one of the Government's most senior public sector bosses.

But documents released today reveal he disagreed with the Reserve Bank's board over how much funding the central bank needed from the Government to operate.

He had formed the view that the aggregate amount of funding over the Five-year Funding Agreement should be $1.031 billion.

"By then it was clear that the Board was willing to agree to a considerably lesser amount than the amount Mr Orr thought was the minimum necessary," according to the Reserve Bank.

"This led to Mr Orr’s personal decision that he had achieved all he could as governor of the Reserve Bank and could not continue in that role with significantly less funding than he thought was viable for the organisation.

"Mr Orr and Professor Quigley entered discussions which led to Mr Orr’s decision to resign. The matter was distressing for Mr Orr. Both parties engaged senior counsel to negotiate an appropriate exit agreement."

The disagreement and resignation was described as being "distressing" for Orr in the Reserve Bank statement, released shortly after 11am.

The sequence of events followed a February meeting with Finance Minister Nicola Willis, the bank's chairperson, Neil Quigley, and Treasury officials.

In its statement, the Reserve Bank dismissed speculation that discussions about regulatory capital requirements for banks contributed to the resignation, stating their review "does not indicate that these discussions were significant to" his decision to quit.

The abrupt nature of Orr's departure was attributed to concerns that information about his resignation might leak from sources outside the Reserve Bank before an official announcement could be made.

"After Mr Orr raised concerns about sources outside RBNZ potentially being aware of his intended resignation, he and RBNZ agreed to make the announcement on March 5."

Christian Hawkesby was appointed acting governor, with the board required to nominate a temporary replacement within 28 days of the position becoming vacant.