Six pull out of govt retail deposit scheme
Six institutions have pulled out of the government’s retail deposit guarantee after they decided not to accept the latest round of tweaks to the scheme.
Monday, December 28th 2009, 8:40AM
by Paul McBeth
Aotearoa Credit Union, Asset Finance, Christchurch Emergency Services Credit Union, Farmers Mutual Finance, Mutual Credit Finance, and Rockforte Finance will all be withdrawn from the scheme from the start of next year. Still, some $84 million worth of investments and deposits will still be guaranteed until they become due or October 12 2010, according to The Treasury. From January 1 new deposits or investments, including the rolling over of existing investments, with these companies will not be underwritten by the government.
Replacement deeds have been sent to the 63 institutions that are continuing to participate in deposit guarantee scheme to cover about $130 billion worth of deposits.
The Treasury tweaked the scheme last month to give non-bank deposit takers a ‘stand down' period of 14 days to allow a company under threat of receivership to resolve its issues. It also gives the government the ability to set a timeframe for claims to be made once a guarantee is drawn on.
Another change, which Marac lobbied for, was to give deposit takers the ability to offer both guaranteed and non-guaranteed deposits to investors. Marac announced it will take uncovered deposits from next year, which could offer investors as much as a 1% premium, and PGG Wrightson Finance announced it will also offer excluded securities at around 1% higher than guaranteed securities.
In October, Whakatane-based Asset Finance said it would not participate in the government's extension to the retail deposit guarantee, saying the government's protection was forcing it to pay a premium twice and limiting its ability to source other avenues of funding.
Finance Minister Bill English announced a 14-month extension to the scheme in August to bring it broadly in line with Australia, that will require deposit takers to have at least a BB credit rating to participate, along with more punitive charges to keep the coverage.
Paul is a staff writer for Good Returns based in Wellington.
| « Marac to offer non-guaranteed term deposit | Bridgecorp receivers all but give up on Momi » |
Special Offers
Commenting is closed
|
|
Printable version |
|
Email to a friend |
