Guarantee costs NZ$47m so far

The New Zealand government for the first time published details of the costs it will incur in meeting its obligation under the retail deposit guarantee scheme up to the end of May 2010. While accounting for the liability of $47 million towards such costs, the government has raised provision for cost of future payments for the remaining entities by NZ$7 million.
The provision stood at NZ$887 million, up from NZ$880 million in April.  Taking into account the $47 million liability, the government's expectation of total loss under the scheme works out to NZ$934 million.

This is nearly $100 million higher than the first provision of NZ$831 million the government made in June last year.

So far five finance companies covered by the government's guarantee have been put into receivership, thus triggering its obligations under the scheme. The last company to be put into receivership was finance company minnow Rockforte Finance in early May, which had deposits of just NZ$3.2 million.

The only major negative development for the sector was news of South Canterbury Finance's ex-chairman Allan Hubbard being put under statutory management, which has raised doubts about survival prospects for the finance company.