Relief for taxpayers as guarantees end
Taxpayers won't have to foot the bill much longer for failing banks and finance companies, with the last of the Crown deposit guarantees ending on Saturday.
Taxpayers have paid out more than $1.9 billion, with the lion's share going to South Canterbury Finance investors.
Nine finance houses failed under the Crown guarantee. The final cost to taxpayers will be less than the total paid to depositors covered by the scheme, but that depends on how much is recovered from the firms that triggered the guarantee.
The original deposit guarantee was introduced in late 2008 at the height of the global financial crisis, when the world's banking systems froze up. The government brought in the guarantee as an emergency measure to maintain confidence in the New Zealand banking system.
The original scheme covered deposits of $133b in 72 banks and finance groups. The government ended up on the hook for more than $1.8b, to more than 38,000 depositors in the original scheme.
While South Canterbury was the biggest collapse, the original scheme also bailed out depositors in a handful of failed finance companies, including Allied Nationwide, Mascot Finance and Vision Securities.
That scheme expired in October 2010 and was replaced with a much smaller, extended deposit guarantee, covering seven institutions and $1.9b.
Equitable Mortgages collapsed into receivership just over a month later, in late November 2010, triggering the Crown guarantee under the extended scheme.
Taxpayers have paid out more than $170million to more than 3700 Equitable Mortgage depositors. The balance of less than 3 per cent of those depositors need to put in claims by Saturday.
There are just three institutions left in the extended deposit guarantee scheme: Fisher & Paykel Finance Ltd, Heartland Building Society, and Wairarapa Building Society.