Wholesale funding guarantee no longer needed
"The wholesale funding facility was set up in November 2008 when the liquidity crisis had hit global markets," he told the New Zealand Australia Investment Forum in Auckland.
"It helped our banks access funding during that crisis, but international market conditions have improved - and continue to improve in 2010. New Zealand banks are now raising funds without using the guarantee, which was always envisaged as a temporary measure for extraordinary times."
The Australian wholesale funding guarantee will end on March 31 and other countries are also winding down their schemes.
The wholesale guarantee facility is separate from the retail deposit guarantee scheme, which is being extended on new, more onerous terms to financial institutions with credit ratings from October 13.
The scheme saw 24 guarantee certificates issued, covering $10.3 billion of borrowing by banks, and netted almost $290 million in fees for the government, which was never called on to pay out on what was essentially a government insurance scheme.
"Banks in New Zealand are now successfully raising funds in the wholesale market without using the wholesale guarantee and we don't expect there will be any further use of the facility between now and the end of April," English said.
(Businesswire)