By Gareth Vaughan
Despite coughing up NZ$69.7 million to investors in two Crown guaranteed finance companies that have failed, the taxpayer is well ahead overall having reaped significantly more than that in fees from the 73 firms who have signed up to the Crown's Retail Deposit Guarantee Scheme. Treasury said on Friday the Crown has paid NZ$69.7 million under the scheme to cover 100% of the claims submitted by investors in guaranteed firms Mascot Finance and Strata Finance, both of whom are in receivership.
The process to repay Vision Securities' eligible depositors is also underway, Treasury said. Retirement home finance company Vision Securities was put into receivership by its trustee Perpetual Trust on April 1. It had 953 depositors owed NZ$28 million. Meanwhile, Treasury had already received NZ$228 million in fees from participating companies by the end of the Crown's June 2009 financial year, which covered just under nine months of the scheme's existence.
That includes NZ$74 million collected in guarantee fees plus another NZ$154 million paid in advance by firms to cover future participation in the scheme. Asked how much Treasury had collected in fees in total since the scheme's introduction, Treasury spokesman Angus Barclay said the figure was only disclosed in the Crown's annual accounts. Introduced by then-minister of Finance Michael Cullen on October 12, 2008, the scheme currently covers deposits totaling about NZ$133 billion with 73 financial institutions guaranteed.
A new, extended scheme will cover deposits in approved companies from 12 October this year until December 31, 2011. The government accounts for the eight months to February 28 show provisions of NZ$849 million for its net potential loss from the Retail Deposit Guarantee Scheme.
This was first published this morning in our Daily Banking and Finance newsletter, which is for our paying subscribers.