The Crown gave notice to FAI Money Limited on 7 May 2010 that it was withdrawing the Crown retail deposit guarantee, effective immediately upon receipt of the notice by FAI Money Limited.
FAI Money Limited (formerly known as PH Limited) is successor to the assets and obligations of a company of the same name. That company (FAI) became party to the Crown retail deposit guarantee on 16 February 2009 and entered into a revised Crown Deed of Guarantee on 11 December 2009.
In late March this year, the Crown was notified that by FAI that it had repaid all debenture holders and stopped taking deposits from the public and that it had no outstanding debt securities on issue.
On 31 March this year FAI, NZ Finance Investments Holdings Limited and PH Limited amalgamated. The amalgamated entity then changed its name to FAI Money Limited. Following the amalgamation, the Crown wrote to FAI Money Limited (the amalgamated entity) advising it of its intention to withdraw the Crown retail deposit guarantee on the understanding that the amalgamated company has no debt securities on issue and does not intend to issue debt securities from the public.
"The Crown stands fully behind its guarantee commitments. In this instance, while there has been no default event relating to FAI or its successor company FAI Money Limited, there is no longer a practical need to maintain those commitments because all of FAI Money Limited's depositors have been repaid and it no longer has any depositors eligible to benefit from the guarantee," said Dr Brian McCulloch, Treasury's Director of Financial Operations.
"The Deposit Guarantee Scheme exists to help maintain confidence in New Zealand's financial markets and financial institutions by protecting eligible depositors. The scheme doesn’t exist to regulate or alter normal financial sector activity. Over the life of the scheme, exits, mergers and wind-downs will occur. This is normal financial sector activity and is expected to continue," said Dr McCulloch.
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