The Government's wholesale guarantee facility for banks has been officially closed today as New Zealand's financial markets improve.
The scheme, set up in November 2008 when the liquidity crisis hit global credit markets, was no longer needed because New Zealand banks were raising wholesale funding without using the guarantee, Treasurysaid today.
The scheme was introduced as a temporary measure for extraordinary times.
To date no claims have been made against the wholesale guarantee facility and Treasury considers the likelihood of future claims to be remote as existing guaranteed issues roll through to maturity.
The Australian wholesale funding guarantee ended last month.
Since the wholesale guarantee was set up, 24 guarantee certificates have been issued, covering $10.3 billion of borrowing by banks. The scheme has made no payouts.
The closure of the wholesale guarantee facility does no affect the current or extended retail deposit schemes, which covers financial institutions.
To date deposits totalling about $133 billion with 73 financial institutions are guaranteed under the scheme until October this year.
The extended scheme covers deposits in approved companies from October 12 this year until December 31, 2011.
When an institution that has signed a guarantee defaults on its obligations, the Crown repays the eligible deposits and takes over their rights as creditors of the institution.
The Crown has repaid $69.7 million to those eligible depositors in Mascot Finance and Strata Finance who have submitted claims.
The process to repay eligible depositors with Vision Securities was underway, Treasury said.
