An ex-BNZ banker, who approved a loan for his own property development, has cut a deal with police over forfeiting $250,000 of frozen funds.

One of the man's former colleagues at the bank has also agreed to the settlement with police, who went to the High Court last September to freeze an $890,000 Auckland house linked to the pair.

The police, according to court documents, allege Ryan William Weir and Scott Alan McRobie took part in "significant criminal activity" when they got a loan from BNZ to develop the house on Calcite Avenue in the South Auckland suburb of Flat Bush.

Neither have been charged nor are the subject of any ongoing investigation. According to court documents they both deny any "significant criminal activity" took place.

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Weir and McRobie both worked at BNZ in Auckland before leaving their jobs last year.

While still employed by the bank, they wanted to purchase and develop the Flat Bush property but needed finance for the venture and had not been able to get it.

Weir then set up a company -- which neither he nor McRobie were a director or shareholder of -- and later approved a loan to it.

He failed to declare his personal involvement in the transaction to the bank and accepts this was a conflict of interest.

After police froze the property, Weir and McRobie agreed it should be sold and it was bought for $891,000 last November.

After the loan to BNZ was paid back, some $272,000 was left over and held by the Official Assignee.

Although Weir and McRobie initially opposed this being forfeited, they reached a settlement with police that was formally approved by the High Court last month.

In the deal, the respondents will get $20,000 of the frozen money back and the rest will be forfeited to the Crown's coffers.

Justice John Faire, in giving the settlement the green light, said he believed it was consistent with the interests of justice. "A settlement obviously effects a considerable saving of time and cost and achieves an appropriate outcome," the judge said.

McRobie could not be contacted yesterday for comment.

Weir said the proceedings against him were misconceived and had no foundation in law.

"Although I breached the bank's policy, I have not broken any laws. I have consistently denied that there was ever any criminal activity. I have not been interviewed by the police, and no charges have been laid," Weir said. "Moreover, the bank has suffered no loss  in fact it has profited from the loan  and its loan was at all times adequately secured.

"I have agreed to the settlement in order to limit my ongoing legal costs, liability, the inherent stress of a court proceeding and ongoing disruption to my life."

BNZ, which went to police over the transaction, did not wish to comment.

The police's case was launched under the Criminal Proceeds (Recovery) Act, which allows authorities to act irrespective of whether a person is facing criminal charges.