Wednesday 15th October 2008
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New Zealand's government tightened rules on how deposit guarantees will apply
to finance companies, curbing their ability to strip out funds and giving the
state more power to probe their operations.
The release today from the Treasury and the Reserve Bank comes after media reports that the scheme, announced by Finance Minister Michael Cullen on Oct. 12, could be open to abuse.
In a joint statement Governor Alan Bollard and acting Treasury head Peter Bushnell said “a number of policy issues are arising that are being addressed” as the scheme is put into place.
Companies rated below BB or unrated would be charged a fee to belong to the scheme, based on the cumulative growth in the book since Oct. 12. New entrants are required to have at least a BBB- rating: investment grade.
Those that join the scheme will have to agree to additional reporting requirements and submit to government appointed inspectors.
A fee of 300 basis points per annum will be charged monthly to finance companies
that are rated below BB or are unrated.
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