Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search


Wholesale Guarantee Facility - Details

1 November 2008

For immediate release

The Treasury
Reserve Bank of New Zealand

Wholesale Guarantee Facility - Details

Following the announcement by the Minister of Finance that the Crown will offer a wholesale funding guarantee facility to investment-grade financial institutions in New Zealand, the Treasury and the Reserve Bank have today released further details of the facility.

Treasury Secretary John Whitehead and Reserve Bank Governor Alan Bollard said: “The primary goal of the facility is to support the re-entry of New Zealand banks to regular foreign markets, on a scale commensurate with our economy’s overall financing needs. At the same time, we’ve structured the guarantee facility in a way that will encourage issuers to graduate from using a government guarantee as soon as reasonably possible.”

The facility will be available to financial institutions that have an investment grade credit rating and have substantial New Zealand borrowing and lending operations.

The facility will operate on an opt-in basis, by institution and by instrument. New issues of senior unsecured negotiable or transferable debt securities will be eligible for inclusion.

A guarantee fee will be charged, differentiated by the credit rating of the issuer and the term of the security being guaranteed. “The fee schedule is designed to ensure that the facility is used while it is needed, but to encourage issuers to graduate from using the guarantee as market conditions permit. The guarantee fee will be reviewed regularly and may be adjusted in future for new issues, in light of experience with the scheme.”

No instruments will be covered by both this scheme and the deposit guarantee scheme.

Dr Bollard and Mr Whitehead noted that: “As a condition of continuing to receive fresh guarantees on new issues, banks utilising this guarantee facility will be required to maintain an additional 2 per cent capital buffer, on top of the existing required 4 per cent Tier 1 capital. Banks all have at least this much additional capital at present, and maintaining current levels of capital will help protect the Crown’s position as guarantor”.

The main features of the facility are outlined in the attached briefing note.
Applications to join the facility should be addressed in the first instance to The Treasury which has overall delegated responsibility for management of the scheme.

Mr Whitehead noted that draft legal documentation has been prepared and will be finalised in the next few days.

“We expect to be in a position to sign issuers up to the facility within the next week or so. Policy guidelines, which will outline formally the way in which we will exercise our discretion under the scheme, will also be published shortly.”


© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines

Back Again: Government Approves TPP11 Mandate

The Government has approved a negotiating mandate for Trans-Pacific Partnership 11 (TPP11), which will ensure New Zealand businesses remain competitive in overseas markets.

Trade Minister Todd McClay says New Zealand will be pushing for the minimal number of changes possible to the original TPP agreement, something that the remaining TPP11 countries have agreed on. More>>




Gordon Campbell: On Why Labour Isn’t Responsible For Barnaby Joyce

As a desperate Turnbull government tries to treat the Barnaby Joyce affair as a Pauline Hanson fever dream – blame it on the foreigners! We’re the victims of the dastardly New Zealand Labour Party! – our own government has chosen to further that narrative, and make itself an accomplice. More>>


Rail: Greens Back Tauranga – Hamilton – Auckland Service

The Green Party today announced that it will trial a passenger rail service between Auckland, Hamilton and Tauranga starting in 2019, when it is in government. More>>


Housing: Voluntary Rental Warrant Of Fitness For Wellington

Wellington City Council is partnering with the University of Otago, Wellington, to launch a voluntary Rental Warrant of Fitness for minimum housing standards in Wellington, Mayor Justin Lester has announced. More>>


Treaty: Agreement In Principle Signed With Moriori

“The Crown acknowledges Moriori was left virtually landless from 1870, hindering its cultural, social and economic development. The Crown also acknowledges its contribution to the myths that the people of Moriori were racially inferior and became extinct." More>>


Susan Devoy: Call For Inquiry Into State Abuse Reaches UN

Race Relations Commissioner Dame Susan Devoy is in Geneva and has asked a United Nations committee to urge the New Zealand government to initiate an inquiry into the physical and sexual abuse of children and disabled people held in state institutions. More>>


(Not National): Cross-Party Agreement On Pike River Re-Entry

The commitment was signed this afternoon by the leaders of Labour, United Future, The Maori Party, and the Green Party and, together with the earlier commitment by New Zealand First, means that there is now a Parliamentary majority behind the families’ fight for truth and justice. More>>






Featured InfoPages

Opening the Election
  • PublicAddress
  • Pundit
  • Kiwiblog