Six pull out of govt retail deposit scheme

Aotearoa Credit Union, Asset Finance, Christchurch Emergency Services Credit Union, Farmers Mutual Finance, Mutual Credit Finance, and Rockforte Finance will all be withdrawn from the scheme from the start of next year. Still, some $84 million worth of investments and deposits will still be guaranteed until they become due or October 12 2010, according to The Treasury. From January 1 new deposits or investments, including the rolling over of existing investments, with these companies will not be underwritten by the government.

Replacement deeds have been sent to the 63 institutions that are continuing to participate in deposit guarantee scheme to cover about $130 billion worth of deposits.

The Treasury tweaked the scheme last month to give non-bank deposit takers a ‘stand down' period of 14 days to allow a company under threat of receivership to resolve its issues. It also gives the government the ability to set a timeframe for claims to be made once a guarantee is drawn on.

Another change, which Marac lobbied for, was to give deposit takers the ability to offer both guaranteed and non-guaranteed deposits to investors. Marac announced it will take uncovered deposits from next year, which could offer investors as much as a 1% premium, and PGG Wrightson Finance announced it will also offer excluded securities at around 1% higher than guaranteed securities.