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Media Statement Six institutions opt out of Retail Deposit Guarantee Scheme

24 Dec 2009

Six institutions have elected not to accept replacement deeds for the Retail Deposit Guarantee Scheme. They are: Aotearoa Credit Union, Asset Finance, Christchurch Emergency Services Credit Union, Farmers Mutual Finance, Mutual Credit Finance, and Rockforte Finance.

In order to provide more flexibility in the scheme, all institutions participating in the Retail Deposit Guarantee Scheme were required to either accept the revised deeds or cease offering guaranteed deposits after 31 December 2009.

The Crown deeds of guarantee for Aotearoa Credit Union, Asset Finance, Christchurch Emergency Services Credit Union, Farmers Mutual Finance, Mutual Credit Finance, and Rockforte Finance will be withdrawn, effective from 1 January 2010. Approximately $84 million of existing investments and deposits with those six institutions will still be guaranteed by the Crown until the earlier of the date the investments or deposits become due and payable or 12 October 2010 because they were made before the withdrawal of the Crown deeds of guarantee.  New deposits or investments (including rollovers of existing investments or deposits) made with those six institutions on or after 1 January 2010 will not be guaranteed by the Crown.

Replacement deeds have been sent to the 63 institutions that continue to participate in the Retail Deposit Guarantee Scheme.  The replacement deeds for those institutions come into effect for new and rolled over deposits from 1 January 2010. In total, the Retail Deposit Guarantee Scheme guarantees $130 billion of deposits.

Full details of institutions that have elected not to accept the replacement Crown Deed of Guarantee, together with details of those will continue to participate in the Retail Deposit Guarantee Scheme, are published on the Treasury website. www.treasury.govt.nz/economy/guarantee/retail

A key change in the replacement deeds is that from 1 January 2010, deposit taking institutions that have signed replacement deeds can choose to issue investments or take deposits on a non-guaranteed basis, if they wish. Institutions must clearly disclose the guarantee or non-guaranteed status of securities in their offering documents.

ENDS

News media contact:

Angus Barclay | Senior Communications Advisor
Tel: +64 4 917 6146
Mob: +64 (0)27 337 1102
Email: angus.barclay@treasury.govt.nz
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