Nearly $80 million has been paid so far under a crown guarantee to investors in finance companies that have defaulted on payments to them.The Treasury said today it had paid $79.1 million of principal and interest to date out of the retail deposit guarant
Nearly $80 million has been paid so far under a crown guarantee to investors in finance companies that have defaulted on payments to them.
The Treasury said today it had paid $79.1 million of principal and interest to date out of the retail deposit guarantee scheme. The bulk, $69.4m, has gone to eligible depositors in Mascot Finance.
That is one of six institutions approved for the scheme that have triggered the crown guarantee. Repayments have been made to depositors with three of the defaulting entities and the process is under way for the remaining three.
"We've put a very good process in place. We're mindful that repayments are funded by taxpayers and we have a duty to ensure that repayments are made to people entitled to receive the money," Treasury's deputy secretary financial operations Philip Combes said.
"The process involves several steps of information-gathering and confirmation. When people respond promptly and include the information that we need, then the repayment process is prompt."
The Crown provided $849 million as at February 28 for the scheme -- covering 73 financial institutions with deposits totalling $133 billion.
The Crown continually updates both the likelihood of further defaults and the expected loss from them. The $849m figure is the latest estimate of the cost of future payments under the scheme after expected recoveries.
The scheme was started on October 12, 2008 to ensure confidence in New Zealand's financial system when international financial markets were turbulent. It has been extended to December 31, 2011 with changed conditions. The current scheme ends on October 12 this year.
The Crown assesses the potential failure of institutions with deposits exceeding $5 billion as being remote and makes no provision for them.
The six institutions that have defaulted and triggered the crown guarantee are:
1 Mascot Finance, with $69.4 million of principal and interest having been repaid to eligible depositors, representing about 99.8 per cent of eligible depositors.
2 Strata Finance, with $300,000 of principal and interest repaid to eligible depositors and no claims outstanding.
3 Vision Securities, with about $9.4 million of principal and interest repaid to eligible depositors, representing about one third of depositors.
4 Rockforte Finance
5 Viaduct Capital
6 Mutual Finance
"With Rockforte Finance, Viaduct Capital, and Mutual Finance, the Treasury is currently at various stages of obtaining and verifying information about depositors and the amounts deposited. We'll contact depositors when we have the necessary information," Mr Combes said.
