Wednesday, New Zealand's Finance Minister Michael Cullen said the government is planning to announce a wholesale deposit guarantee scheme for banks this weekend. The minister made his comments to Radio New Zealand.
The Treasury and the Reserve Bank of New Zealand were discussing various aspects of the financial sector and final report is expected later today, Cullen said.
On October 12, Cullen had announced that the government is introducing an opt-in retail deposit guarantee scheme that will cover all retail deposits of participating New Zealand-registered banks and retail deposits by locals in non-bank deposit-taking entities. This would include building societies, credit unions and deposit-taking finance companies. The scheme excludes related party liabilities.
Further, Cullen said he expects some managed funds to come under the guarantee scheme. At the same time, he added that any guarantee scheme is fraught with difficulties at the margin. The minister also said the government will explore "sensible measures" to avoid a collapse of the managed mortgage funds industry.
Tuesday, AXA New Zealand had suspended three mortgage funds having a combined NZ$225 million invested. The suspension is for 30 days and it was taken in response to an expected increase in withdrawals from the funds following the Government's announcement of bank deposit guarantees.
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