Government increases provisioning for deposit guarantee

According to the government's financial statements for the three months ended September 30, the provisioning increased $35 million from a forecast $831 million as it manages its exposure to the risk. Some 73 financial institutions have joined the scheme with deposits totalling $124.3 billion under guarantee.

Guarantees have already been triggered for two deposit takers at an estimated cost of $34 million.

Along with the increased provision came higher fees, with the government taking in $162 million more than expected in wholesale fee receipts for the guarantee scheme.

Finance Minister Bill English announced an extension to the retail deposit guarantee scheme earlier this year that will take it out until the end of 2011, though deposit takers will require a BB credit rating and face more onerous charges if they stay covered by the government.