Hon Grant Robertson
Minister of Finance

New Zealanders will have up to $100,000 of their deposits in any eligible institution guaranteed in the event that institution fails under legislation passed in Parliament today to strengthen and protect the financial system.

The Deposit Takers Bill passed its third reading today as the third and final piece of legislation in a comprehensive review of the Reserve Bank of New Zealand Act.

“The passing of this bill will allow for the introduction of depositor protection and close a long-standing gap in New Zealand’s financial safety net, bringing New Zealand in line with international best practices,” Grant Robertson said.

“This means eligible New Zealanders will be provided economic security if their bank or other deposit taking institution fails, while helping protect the country’s financial system and wider economy. The $100,000 limit will fully protect around 93 percent of depositors.

The Bill brings all deposit takers (such as banks, credit unions, building societies and finance companies) under a single coherent regulatory framework and protects New Zealanders’ money through the introduction of a depositor compensation scheme.

The Bill also gives the Reserve Bank the ability to set standards as the main tool for imposing prudential requirements and modernises the regulation and supervision of all deposit takers and strengthens New Zealand’s crisis management framework.

“The Reserve Bank will have stronger and a broader range of supervisory and enforcement powers to ensure compliance and avoid breaches,” Grant Robertson said.

“The Reserve Bank and Treasury will soon consult with banks and other deposit takes on the funding strategy and levy framework for the Depositor Compensation Scheme, which is intended to be up and running by the end of 2024.

“Overall, the Bill considerably strengthens New Zealand’s financial system safety net and contribute to a robust framework of protections for depositors.”

The Deposit Takers Bill follows the Reserve Bank of New Zealand (Monetary Policy) Amendment Act 2018, which changed the objectives and decision making process for monetary policy, and the Reserve Bank of New Zealand Act 2021, which dealt with institutional arrangements for the Reserve Bank.

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