Crown Retail Deposit Guarantee Scheme

The Crown Retail Deposit Guarantee Scheme was an opt-in deposit insurance scheme, established under the Public Finance Act 1989 in New Zealand during the Great Recession, 2008 to 2011. Dr Michael Cullen, Finance Minister at the time of the scheme's introduction said, "The deposit guarantee is designed to give assurance to New Zealand depositors. The New Zealand banking system remains sound. We want to ensure that ordinary New Zealanders feel that their deposits are safe in the current uncertain international financial market conditions."[1]

The scheme guaranteed that the New Zealand Government would repay those who lost money in failed financial institutions. It was implemented on 12 October 2008, administered by Treasury and the Reserve Bank and at its height resulted in Crown guarantees over $133 billion.[2] Ninety-six institutions were covered by the scheme - 60 non-bank deposit takers, 12 banks and 24 collective investment schemes. All guarantees had ended by December 2011.[3]

Finance company failures and bailouts

Nine finance companies out of the thirty accepted into the scheme collapsed. This resulted in the Crown bailing out investors, paying $2 billion to more than 42,000 depositors. The three largest bailouts were of South Canterbury Finance Limited, Allied Nationwide Finance Limited, Equitable Mortgages Limited.[4]

Bailouts under the scheme[5]
Company name Entry date in scheme Failure date Amount paid out
Allied Nationwide Finance Limited 19 November 2008 20 August 2010 $131.0m
Equitable Mortgages Limited 4 December 2008 26 November 2010 $140.2m
Mascot Finance Limited 12 January 2009 2 March 2009 $70.0m
Mutual Finance Limited 13 November 2008 14 July 2010 $9.2m
Rockforte Finance Limited 20 February 2009 10 May 2010 $4.0m
South Canterbury Finance Limited 19 November 2008 31 August 2010 $1,580.3m
Strata Finance Limited 19 November 2008 31 August 2010 $0.5m
Viaduct Capital Limited 13 November 2008 14 May 2010 $7.6m
Vision Securities Limited 5 December 2008 1 April 2010 $30.0m

See also

References
  1. "Deposit guarantee scheme introduced". Reserve Bank of New Zealand. New Zealand Government. 12 October 2008. Archived from the original on 14 October 2008. Retrieved 1 May 2015.
  2. "The Treasury: Implementing and managing the Crown Retail Deposit Guarantee Scheme" (PDF). Office of the Auditor-General. New Zealand Government. September 2011. Retrieved 1 May 2015.
  3. Weir, James (28 December 2011). "Relief for taxpayers as guarantees end". Stuff.co.nz. Retrieved 1 May 2015.
  4. "The Treasury: Implementing and managing the Crown Retail Deposit Guarantee Scheme" (PDF). Office of the Auditor-General. New Zealand Government. September 2011. Retrieved 1 May 2015.
  5. "The Treasury: Implementing and managing the Crown Retail Deposit Guarantee Scheme" (PDF). Office of the Auditor-General. New Zealand Government. September 2011. Retrieved 1 May 2015.
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