South Canterbury Finance is one of the companies approved by Treasury to take part in the retail deposit guarantee scheme. Photo / Dean Purcell
The Government has added $54 million to its total provisioning for potential payouts under the Crown retail deposit guarantee scheme, lifting total provisioning to NZ$934 million at May 31.
The figures are disclosed in the Government's financial statements for the 11 months to May, released today.
The provision for losses
considered more likely than not to occur has been lifted to NZ$887 million from NZ$880 million at the end of April. That covers the cost of future payments to investors in currently operating entities guaranteed under the scheme after expected recoveries.
In addition the Crown has also included liabilities of NZ$47 million to cover the cost of payments to investors in companies guaranteed by the scheme that are now in receivership.
Companies covered that are in receivership include Vision Securities, Viaduct Capital, Rockforte Finance, Strata Finance and Mascot Finance.
Vision Securities' receivers, Deloitte's Rod Pardington and David Levin, recently said any distributions to investors' from money recovered would be significantly less than the payments made to eligible investors' under the Crown guarantee.
Some 958 Vision Securities debenture holders are owed $28.4 million.
The guarantee scheme was introduced by the then Labour-led government in October 2008 at the height of the Global Financial Crisis. It expires on October 12 this year but will be replaced by the extended Crown retail deposit guarantee scheme through until December 31, 2011.
So far Treasury has approved eight firms for the extended scheme. They are the Canterbury Building Society, Equitable Mortgages, Fisher & Paykel Finance, Marac Finance, PGG Wrightson Finance, South Canterbury Finance, the Southern Cross Building Society and the Wairarapa Building Society.
At May 31, 73 financial institutions had joined the scheme and deposits totalling $133 billion had been guaranteed. The Crown receives fees from companies participating in the scheme. It only releases the total amount collected at the end of its financial year. As of June 30, 2009 Treasury had received NZ$228 million in fees.
Over NZ$6.6 billion has been frozen in almost 200,000 accounts since the crisis began in 2006.
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