The taxpayers' bill for the South Canterbury Finance failure rose by a further $300 million to $1.2 billion yesterday as a result of loans to company insiders going sour - and Prime Minister John Key is unable to rule out a further blowout.

Crown Financial Statements for the eight months to February 28 were released yesterday and they contained "a $331 million revision in the estimate of recoveries relating to the deposit guarantee scheme which was not forecast". Finance Minister Bill English later confirmed most of this shortfall in forecast recoveries related to Allan Hubbard's South Canterbury Finance which failed in August last year triggering a $1.77 billion taxpayer-funded payout to investors under the deposit guarantee scheme.

In addition, said Mr English, the expected effect of the latest Canterbury earthquake had been factored into likely recoveries from the approximately $2 billion in taxpayers' funds paid out under the scheme.

"Overall, we now expect a net loss from the Retail Deposit Guarantee Scheme of around $1.2 billion, compared with earlier estimates of around $900 million," said Mr English.

Mr Key emphasised the shortfall in recoveries related to South Canterbury's loans to "related party" borrowers. That includes the company's management as well as friends and associates of Mr Hubbard.

The news yesterday did not relate to the company's other assets which include helicopters and apple packing and export businesses.

Nevertheless, despite the "good work" done in recent months by the company's receivers, their tally of what the company's assets are worth remained the "best estimate", said Mr Key. "I can't rule out that there are further losses."

The Serious Fraud Office in October last year launched an investigation into SCF related party transactions while Reserve Bank documents later showed the bank was worried that the company's related party transactions potentially breached the terms of the retail deposit guarantee scheme more than a year before it failed.

South Canterbury's Government-appointed receiver Kerryn Downey said the new losses were calculated by Treasury from information he provided relating to 30 loans, some of which were already under investigation by the SFO.

"Some of these parties I presume have been friends of Hubbard and so forth and likely had difficulty raising financing from elsewhere, but that's guesswork on my part," he told Radio New Zealand.

Labour Party finance spokesman David Cunliffe said the decision to place the company into receivership rather than accept a last minute offer for the company from a consortium comprising the NZ Superfund, Ngai Tahu and businessman Duncan Saville may have cost the taxpayer hundreds of millions of dollars.

But Mr Key repeated his Government's view that none of the offers on the table for the company before it went into receivership would have relieved the Government of its South Canterbury Finance liabilities.

Mr Key said the net losses in relation to the retail deposit scheme would be offset by the $500 million in fees collected leaving the final loss at about $600 million to $700 million.