Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Further details of deposit guarantee announced

Reserve Bank Email Service

Date 15 October 2008
Time Immediate

Further details of deposit guarantee scheme announced

Treasury and the Reserve Bank have this afternoon released further details of the opt-in retail deposit guarantee scheme announced by the Minister of Finance on 12 October.

The details include information about tighter requirements on non-bank deposit takers; a fee for finance companies that are rated below BB or unrated; rating requirements for new entrants; coverage of non-resident depositors with New Zealand branches of overseas banks; senior debt requirements; and the approval process.

The scheme will cover all retail deposits of participating New Zealand-registered banks and retail deposits by locals in non-bank deposit-taking entities, and is designed to give assurance to New Zealand depositors in the current uncertain international financial market conditions.

Reserve Bank Governor Dr Alan Bollard and Acting Secretary to The Treasury Dr Peter Bushnell noted today that "as the retail deposit guarantee scheme is being implemented, a number of policy issues are arising that are being addressed".

Decisions have now been made to:

* Tighten the requirements upon non-bank deposit takers

The deed for non-bank deposit-takers will be tailored to contain tighter controls including:

- limiting potential for stripping out funds through, for example, dividends, or payments to related parties; - increasing reporting requirements and allowing the Crown to appoint an inspector; and - enabling an assessment of whether business behaviour is taking place that would then result in breach of the terms of the guarantee

In addition there will be personal undertakings required from directors.

* Introduce a fee for non-rated finance companies

A fee of 300 basis points per annum will be charged monthly to finance companies that are rated below BB or are unrated (on the cumulative growth in the book since 12 October 2008).

* Require all new entrants to the scheme to be rated BBB- or better

New entrant requirements (eg companies seeking to come into the scheme that were not in existence or ineligible on 12 October 2008) must be BBB- rated or better in order to be eligible to apply to join the scheme.

* Cover non-resident depositors in New Zealand branches of overseas banks as at 12 October 2008

Non-resident deposits in New Zealand branches of overseas banks will be brought into guarantee coverage.

However, the guarantee is limited to the total amount of the non-resident deposit base as at 12 October 2008 and up to a further 10 percent per year of that deposit value (to cover for interest and any variation in deposit level).

* Ensure that deposits with building societies and credit unions are covered

As building societies and credit unions issue subordinated debt the deed will ensure such deposits are covered by the guarantee. Subordinated debt issued by other entities will not be covered.

* Include collective investment schemes (with certain conditions)

As announced earlier in the week, it has also been decided to include, with certain conditions, collective investment schemes (CIS) that invest solely in government debt or institutions subject to a government guarantee and in debt of non-bank guaranteed institutions to the level held on 12 October 2008.


Specimen deeds for banks (including branches) and non-banks will be made available via the Treasury website later tonight (Wednesday 15 October).

The specimen deed for collective investment schemes will be made available late tomorrow.

Dr Bushnell said: "While no applications have been approved yet, once the final deeds are made available (tonight and tomorrow), the Treasury will work quickly to ensure that applications are processed and approvals made public. We expect this process to take a matter of days."


© Scoop Media

Business Headlines | Sci-Tech Headlines


Serious Fraud Office: Commences Enquiries Into Allegations Of COVID-19 Wage Subsidy Fraud
The Serious Fraud Office has commenced a number of enquiries into alleged abuse of the Government’s COVID-19 Wage Subsidy. Director Julie Read said the allegations relate to multiple complex cases of potential fraud that have been referred to the agency following extensive investigations ... More>>

Environment: Preliminary Environmental Data On New Zealand’s Air Quality Released Today

The Ministry for the Environment and Stats NZ have published the Our air 2021: preliminary data release today. We are currently working to revise the Our air 2021 report to incorporate analysis of the World Health Organization (WHO) 2021 air quality guidelines that were released on 23 September 2021... More>>

Statistics: Food Prices Rise For Sixth Consecutive Month
Food prices rose 0.5 percent in September 2021 compared with August 2021, mainly influenced by higher prices for grocery food and meat, poultry, and fish, Stats NZ said today. September’s movement is the sixth consecutive monthly rise. After adjusting for seasonality, prices rose 0.9 percent... More>>

Reserve Bank: Robust Balance Sheets Yield Faster Economic Recovery

Stronger balance sheets for households, businesses, financial institutions and the government going into the pandemic contributed towards maintaining a sound financial system and yielding a faster economic recovery than following previous deep recessions... More>>

Transpower: Releases Independent Report Into Events Of August 9
Transpower’s Chief Executive Alison Andrew has today released an independent report into the grid emergency of August 9 when insufficient generation was available to meet demand, leading to some customers being disconnected... More>>

Bayleys: Latest Lockdown Adds Further Fuel To Industrial Property Market

The recent construction shutdown resulting from Auckland’s Covid 19’s lockdown restrictions has put additional pressure on an industrial property market that is already struggling to keep pace with demand... More>>