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Deposit guarantee cap halved in third year

The New Zealand government will extend the Retail Deposit Guarantee Scheme and change some of its terms and conditions, the finance minister Bill English said yesterday. The government's wholesale funding guarantee is not affected by this decision.The current scheme, announced in late 2008, ends on October 12, 2010. The new scheme will start on October 13, 2010 and end on December 31, 2011.The key changes is a halving of the value of deposits covered, from NZ$1 million down to NZ$500,000 for banks, and NZ$250,000 in non-bank institutions.Only institutions with a credit rating of BB or better can be covered after October 2010.Fees will also increase, and they are a lot steeper for finance companies than other institution types, given the much lower credit rating of the latter.Interest.co.nz

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