Government pays out $79 mill to guaranteed deposits

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The government has paid out $79.1 million to investors in three of the six failed finance companies covered by the deposit guarantee.

Monday, July 19th 2010, 10:12PM 2 Comments

by Paul McBeth

Some $69.4 million has been paid to deposit holders in Timaru lender Mascot Finance, the first to fall in March last year, though the Crown stands to claw back 55 cents in the dollar from that guarantee, according to the last report from the receiver. About $300,000 was paid to eligible deposits in Strata Finance, and while the receiver expects a shortfall in repayments it is unclear how much the government will recoup.

About a third of eligible depositors in Vision Securities have been paid $9.4 million of the $28 million owed to investors when it collapsed, though the receiver is unsure how much it will be able to secure from the sales process.

"We're mindful that repayments are funded by taxpayers and we have a duty to ensure that repayments are made to people entitled to receive the money," said Philip Combes, deputy secretary financial operations at the Treasury. "The process involves several steps of information-gathering and confirmation. When people respond promptly and include the information that we need, then the repayment process is prompt."

The government expects to pay out $934 million under the guarantee, according to its financial statement for the 11 months through May, including a $47 million liability for the cost of payments to investors in guaranteed entities. That was up from $880 million provided for in the 10 months through April.

Treasury's Combes said the department is working through various stages to verify depositor information in respect to Rockforte Finance, Viaduct Capital and Mutual Finance, the other three finance companies to call on the scheme.

Paul is a staff writer for Good Returns based in Wellington.

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