Treasury says it has all but finished paying out investors in finance companies that collapsed whilst covered by the initial Crown retail deposit guarantee scheme.
Philip Combes, Treasury's deputy secretary of financial operations, said a total of 38,459 depositors in eight failed companies had been paid about NZ$1.83 billion. The eight guaranteed companies that failed during the initial guarantee period were Mascot Finance, Strata Finance, Vision Securities, Rockforte Finance, Viaduct Capital, Mutual Finance, Allied Nationwide Finance and South Canterbury Finance.
Combes said it was too soon to say what the taxpayer's ultimate tab would be.
“The final cost to taxpayers will be lower than the total paid to depositors but will depend on how much is recovered from the firms that triggered the guarantee,” said Combes.
“The companies that defaulted now owe the Crown and the Treasury is seeking to recover money on taxpayers’ behalf."
The initial scheme ran from October 12, 2008 until October 12 this year. It has been replaced by the extended Crown retail deposit guarantee scheme which runs until December 31, 2011. Already one company covered by the extended scheme, Equitable Mortgages, has been placed in receivership with about NZ$178 million owed to 6,000 depositors.
Combes said Treasury expects to start repaying Equitable depositors in the first quarter of 2011. The extended scheme guarantees NZ$2.3 billion worth of investors' deposits and Treasury had not provisioned for any company covered by the new scheme to default.
The other companies accepted into the extended scheme are merger partners Marac Finance, the Southern Cross Building Society and the Canterbury Building Society, plus Fisher & Paykel Finance, PGG Wrightson Finance, and the Wairarapa Building Society.
Read Treasury's statement below:
More than 38,000 depositors have been paid under the original Retail Deposit Guarantee Scheme that expired this year, after the finance companies they invested with defaulted on their obligations.
“The scheme was an emergency measure to ensure confidence at a time when the world’s financial systems were in crisis,” Treasury Deputy Secretary Financial Operations Philip Combes said.
Eight financial institutions defaulted while participating in the scheme, which started in October 2008 and ended on 12 October this year, with taxpayers funding approximately $1.83 billion of repayments.
“The final cost to taxpayers will be lower than the total paid to depositors but will depend on how much is recovered from the firms that triggered the guarantee,” Mr Combes said.
“The companies that defaulted now owe the Crown and the Treasury is seeking to recover money on taxpayers’ behalf,” Mr Combes said.
Payments to depositors with five of the Crown guaranteed financial institutions were completed in late October and payments for depositors with the remaining three were completed last week. Two Viaduct Capital depositors are not yet due for payment because the Trustee for Viaduct Capital chose not to accelerate the maturity date of deposits.
“Approximately 45 depositors (or 0.1% of the 38,600 total) could not be traced using the available address and account information. These depositors are still eligible for approximately $0.1 million worth of payments in total. We know who these depositors are but not how to get in touch with them. I encourage these depositors to call toll-free on 0800-220-010 to provide their address details,” Mr Combes said.
The Treasury expects to start repaying depositors with Equitable Mortgages Limited in the first quarter of 2011. Equitable Mortgages was placed into receivership on 26 November 2010 and eligible depositors holding eligible debt securities issued by Equitable Mortgages will be repaid under the terms of the extended Crown guarantee.
7 Comments
What this press release doesn't say is how many claims were turned down by the Treasury because they decided the depositors were "inelligilble" under the terms of the guarantee. The nit picking that goes on by Treasury bureaucrats in this regard is the main reason it takes them so long to pay out. The government was aware of this, which is why they told the nit picking bureaucrats to get back in their box after the SCF default and just to pay out *all* investors on the registry (otherwise it would have taken Treasury years to nit pick over each of the 35000 odd SCF claims). No doubt being over-ruled like this peeved the Treasury but they will be rubbing their hands with glee now that Equitable has defaulted and they can get back to their nit picking ways. In that regard I notice in this press release that Treasury is already saying they won't be paying out any of the Equitable claimants until "the first quarter of 2011" even though they already have the details of some of the claimaints on record because they have previous claimed after one of more of the other defaults. It seems Treasury likes to lecture the rest of the public service about becoming more "efficient" but doesn't apply the same standards to themselves.
Yes, I've heard much the same thing from a few people - the biggest issue has been trusts, where the beneficiary or a trustee has been offshore (but is a NZ citzen) or worse when a trustee (or trustees) have not been eligible under the citizenship criteria but the beneficiaries are... Treasury has made these people's lives a misery...
Gareth, What happened was that the Treasury declined quite a few claims pre the SCF default but, after SCF (with its 35000 depositors) defaulted, the Treasury was told to pay them all out (to avoid years of delay while the bureaucrats ran a magnifying glass over every SCF claim). To be fair to people who had been declined on the pre SCF claims, the Treasury was told to over-rule the previous "Declined" cases and pay them out to. So everybody should have been paid out whether they were eligible or not. This applies to all the pre Oct 12 defaults (Allied Nationwide,Vision etc).
What would be interesting to know - and maybe you could ask the Treasury - is how many claims were originally declined (to subsequently get a lifeline post SCF and be paid out after all).
What we can be sure about is that the Treasury was mightily pissed off that all their "hard work" in nazel gazing over the minute details of claims and then posting a big "DECLINED" stamp on them, was over-ruled by the government.
To get their own back they will be extra tough with the Equitable claim process. And remember,the Extended Guarantee which now applies is tougher than the original guarantee.
I expect there will be dozens of very disappinted claimants...........
Gareth, What happened was that the Treasury declined quite a few claims pre the SCF default but, after SCF (with its 35000 depositors) defaulted, the Treasury was told to pay them all out (to avoid years of delay while the bureaucrats ran a magnifying glass over every SCF claim). To be fair to people who had been declined on the pre SCF claims, the Treasury was told to over-rule the previous "Declined" cases and pay them out to. So everybody should have been paid out whether they were eligible or not. This applies to all the pre Oct 12 defaults (Allied Nationwide,Vision etc).
What would be interesting to know - and maybe you could ask the Treasury - is how many claims were originally declined (to subsequently get a lifeline post SCF and be paid out after all).
What we can be sure about is that the Treasury was mightily pissed off that all their "hard work" in nazel gazing over the minute details of claims and then posting a big "DECLINED" stamp on them, was over-ruled by the government.
To get their own back they will be extra tough with the Equitable claim process. And remember,the Extended Guarantee which now applies is tougher than the original guarantee.
I expect there will be dozens of very disappinted claimants...........
Gareth, What happened was that the Treasury declined quite a few claims pre the SCF default but, after SCF (with its 35000 depositors) defaulted, the Treasury was told to pay them all out (to avoid years of delay while the bureaucrats ran a magnifying glass over every SCF claim). To be fair to people who had been declined on the pre SCF claims, the Treasury was told to over-rule the previous "Declined" cases and pay them out to. So everybody should have been paid out whether they were eligible or not. This applies to all the pre Oct 12 defaults (Allied Nationwide,Vision etc).
What would be interesting to know - and maybe you could ask the Treasury - is how many claims were originally declined (to subsequently get a lifeline post SCF and be paid out after all).
What we can be sure about is that the Treasury was mightily pissed off that all their "hard work" in nazel gazing over the minute details of claims and then posting a big "DECLINED" stamp on them, was over-ruled by the government.
To get their own back they will be extra tough with the Equitable claim process. And remember,the Extended Guarantee which now applies is tougher than the original guarantee.
I expect there will be dozens of very disappinted claimants...........
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