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Annual Report of the Treasury for the Year Ended 30 June 2012

Administration of Guarantees and Indemnities Given by the Crown Permanent Legislative Authority

Scope of Appropriation

  • This appropriation is limited to expenses incurred in connection with administering of guarantees and indemnities given by the Crown, as authorised by section 65ZG of the Public Finance Act 1989.
  • The Crown Retail Guarantee Scheme was wound down by 31 December 2011. There are no remaining guaranteed entities, and payouts under the Crown Retail Guarantee Scheme have been completed except in instances where claims have not been lodged. The budget for 2012/13 is for the remaining Wholesale Funding Guarantee Facility (WFGF). It is not expected that WFGF will be called on.

Significant Work Completed During 2011/12

  • There have been no defaults in the wholesale scheme so no work required on this output over the year.
  • All eligible depositors in Equitable Mortgages have now been repaid. The receivers for Equitable (acting on the instruction of the Trustee) have sought court direction in relation to the treatment of a small number of depositors in Equitable where their maturing guaranteed deposits were re-invested into unguaranteed securities and the determination may impact on the Crown's liability. The total amount affected by the court direction is $1.400 million in relation to 80 depositors.
  • The Treasury proposed the consolidation of a majority of existing receiverships into a single management vehicle, which was approved by Ministers. The primary financial benefit was a 55% reduction in ongoing realisation costs. In addition, the proposed approach reduced workload involved in monitoring over the next two to three years (as the residual assets are realised) as well as offering scope to improve the level of recoveries.
  • The Board-elect was approved in December 2011 and by 30 June 2012 the new entity (Crown Asset Management Limited [CAML]) was operating and the residual asset portfolio from the largest receivership (South Canterbury Finance [SCF]) had been transferred, with the remaining receiverships to follow.
Performance Measures: Administration of Guarantees and Indemnities Given by the Crown Permanent Legislative Authority
Performance Dimensions for 2011/12 Target Performance for 2011/12
No unnecessary delays in processing applications. Achieved Achieved
Accuracy of payouts. 100% 100%
Non-complex claims processed within one month of receipt of the claim. 100% 100%
Administration of Guarantees and Indemnities Given by the Crown PLA
2011
Actual
$000
Administration of Guarantees and Indemnities Given by the Crown PLA 2012
Actual
$000
2012
Main Estimates
$000
2012
Supp. Estimates
$000
3,094 Expenses 1,594 1,820 1,820

Funded by:

3,048 Revenue Crown 1,557 1,798 1,798
46 Other revenue 37 22 22

Administration of Guarantees and Indemnities is $226,000 under the Supplementary Estimates budget. This relates to funding set aside for potential litigation and payments.

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