New Zealand Revises Deposit Guarantee Scheme
11/18/2009 3:21 AM ET
(RTTNews) -
The New Zealand government announced on Wednesday that it was modifying the Retail Deposit Guarantee Scheme to make it more flexible for deposit taking institutions, while protecting existing depositors.
The New Zealand Treasury said it is withdrawing existing deeds and replacing them with revised guarantee deeds for the current scheme. The modified scheme would allow participating institutions to offer both guaranteed and non-guaranteed debt securities. Also, it would provide a 14-day "stand down" period for institutions to resolve a potential default, thereby avoiding receivership, before it takes on the Crown guarantee. The scheme also allows the government to set a time frame for claims to be made after a default.
Brian McCulloch, Treasury's Director of Financial Operations noted that existing investments by eligible depositors are not affected by these changes and they continue to benefit from the current Crown guarantee. "The Crown stands fully behind its guarantee commitments and the safety net remains in place."
The Treasury said participating institutions must approve the revised scheme before December 4, which will come into effect on January 1, 2010. If any institution declines to sign the new deed, then new deposits and investments made after January 1, 2010 would not be guaranteed. However, the existing eligible deposits made prior to January 1, 2010 will continue to benefit from the existing Crown guarantee until expiry of the current Retail Deposit Guarantee Scheme on 12 October 2010, unless those deposits become due and payable earlier.
by RTT Staff Writer
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