Information about the management and monitoring of the Extended Retail Deposit Guarantee Scheme conducted by the Treasury.
This scheme closed on 31 December 2011The Crown's Extended Retail Deposit Guarantee Scheme ended on 31 December 2011. Some deposits with the Public Trust continue to be covered under the Public Trust Act but no deposits with other financial institutions are guaranteed by the Crown for any default after 31 December 2011.
The focus of monitoring and management activity for the scheme will continue to evolve in response to the environment and the ongoing evolution of the financial sector as a whole.
The Treasury has a regular monitoring framework involving standard monthly reporting on a range of information in relation to guaranteed institutions to ensure it is able to effectively manage the Crown’s position and the objectives of the scheme.
The standard monthly reporting is supplemented by:
- ad-hoc information requests seeking further explanations of significant movements
- information provided in support of transactions e.g. related party transactions, that must be disclosed or require Crown consent under the Deed of Guarantee
- reviews of audited half year and annual accounts
If concerns arise
If any concerns in relation to any institution participating in the scheme, the Crown has a range of responses available to it including:
- requesting additional information from the institution, the Trustee, the auditors and others;
- appointing an inspector to undertake an investigation into any matters of concern or requiring the institution to do so;
- requesting the institution to remedy particular matters in the event of a breach.
In serious cases the Crown may exercise its rights of withdrawal under the terms of the Deed of Guarantee.
The Crown may also exercise its rights where, for example, an institution has been winding itself down and there are no longer any deposits to be covered by the guarantee. If the Crown withdraws the guarantee, deposits made after the withdrawal takes effect no longer have the benefit of a Crown guarantee but eligible deposits made before the effective date of withdrawal retain the benefit of the Crown guarantee in the event of failure, until either the deposit is repaid or rolled over or the end of the scheme, whichever happens earlier.
In undertaking any of these options, the Treasury is and continues to be conscious of ensuring due process, for example, providing the affected institution with full opportunity to comment on reports commissioned by the Treasury in respect of any specific investigation initiated in relation to that institution.