New Zealand Finance Minister Michael Cullen has announced that the New Zealand government is to introduce an opt-in retail deposit guarantee scheme for 2 years.
The scheme will cover all retail deposits of participating New Zealand-registered banks and retail deposits by locals in non-bank deposit-taking entities. This would include building societies, credit unions and deposit-taking finance companies.
The deposit guarantee scheme does not include related party liabilities.
For New Zealand incorporated registered banks deposits from both residents or non-residents, will be covered.
For non bank deposit takers and for the unincorporated branches of overseas entities only deposits of New Zealand citizens and New Zealand tax residents will be covered.
Deposit liabilities will be covered regardless of the currency in which they are denominated.
Deposits and other liabilities owed to financial institutions, whether in NZ or offshore, are explicitly excluded from this guarantee.
The new scheme is an opt-in scheme and would take the form of a bilateral contractual agreement between the Crown and the individual institutions which take up the guarantee.
The scheme will be free for institutions with total retail deposits under $5 billion. A fee of ten basis points per annum will be charged on total deposits above $5 billion.