The Government announced last week that the Crown Retail Deposit Guarantee Scheme, which expires on 12 October 2010, will be extended.
The extended scheme will commence on 13 October 2010 and end on 31 December 2011. Institutions will have to re-apply if they wish to participate in the extended scheme, but not all institutions currently covered by the existing scheme will be eligible. The extended scheme will be limited to banks, credit unions, building societies and finance companies. Collective investment schemes and institutions with a credit rating lower than BB will not be eligible for the extended scheme. Other changes in the extended scheme include:
- changing the sliding scale of fees. The new scale will vary depending on type of institution as well as the credit rating to reflect the institution’s risk profile. Fees for finance companies will range from 15 basis points for institutions rated AA and above, to 150 basis points for those rated BB. Fees for all other eligible institutions will begin at 15 basis points for those rated AA- and above, and will be capped at 60 basis points for BB rated institutions
- discontinuing the fee thresholds in the current retail scheme. Fees will apply to all deposits covered by the extended scheme, and
- lowering the current $1 million deposit coverage cap to $500,000 per depositor per institution for bank deposits, and to $250,000 per depositor per institution for non-bank deposits.
None of these changes affect the application of the current retail scheme, or the Wholesale Funding Guarantee facility.
Please contact the lawyers on the right-hand side of this page if you would like further information on the extended scheme.