SCF likely to cost an extra $331 mill
The government now expects its retail deposit guarantee scheme will cost it about $1.2 billion, up from its previous $900 million estimate, largely because of lower related party loan recoveries from the receivership of South Canterbury Finance.
Monday, April 4th 2011, 12:54PM
by Jenny Ruth
Finance minister Bill English says the government's accounts for the eight months ended February include a $331 million increase in the scheme's expected loss, mostly due to South Canterbury Finance's lower recoveries.
"The receiver has provided updated information on South Canterbury's lending business not available previously," English says.
The Serious Fraud Office has been investigating five of the companyls related party loans.
South Canterbury Finance went into receivership on August 31 last year, at which point the government was estimating making good on its guarantee of SCF's debentures and paying out other high-ranking creditors would cost it about $600 million.
The Government has already paid out $1.7 billion to cover investor losses under the guarantee scheme and will receive any recoveries.
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