(01 September 2010 – New Zealand) The New Zealand government has said it intends to sell off South Canterbury Finance to foreign investors after it was put into receivership yesterday.At a press conference the nation’s Prime Minister, John Key, said that the government was now in discussion with potential buyers.
The country’s leader also warned of other potential financial company failures and said the government would look after investors by keeping the guarantee on investments in place.
Yesterday the government called in the receivers and took control of South Canterbury Finance’s assets, also offering to buy out all other creditors to become the firm’s sole beneficiary.
Mr Key said the finance company ran into trouble when it began lending to people who could not afford to pay the funds back and the money was lent against assets that contained no value.
In the last hour Sandy Maier, chief executive of South Canterbury Finance, tried desperately to find a single private investor, but admitted defeat early yesterday morning.
Soon after, the Treasury confirmed qualifying depositors would be paid in full by the government guarantee, and in a surprise move said the cover would be extended to all depositors.
The payout includes NZ$1.6 billion (A$1.25 billion) to more than 35,000 depositors, who will receive the money over the next couple of months, and a NZ$175 million loan to the receivers to buy out other creditors.
Meanwhile, taxpayers face a wait of up to four years to find out how much they will get back from their NZ$1.8 billion bailout of South Canterbury Finance’s depositors.
The collapse of the company will cost $372 for every New Zealander.