The Government must protect Kiwi bank depositors and ensure that the first $30,000 of all deposits is guaranteed, says Labour’s Finance spokesperson David Parker.
“Under Labour in the event of a bank failure the first $30,000 of all deposits will be protected and will not be subjected to a ‘haircut’.
“The cost of that guarantee must be borne by the banking system, meaning it would be a cost paid by banks that did not fail. This is the system used in Australia and it should also apply here. Why have a different system in New Zealand than in Australia? It creates yet another reason to move to, or invest in, Australia rather than here.
“The Reserve Bank’s proposed open-bank resolution means all unsecured Kiwi depositors in a failed bank will lose money, through no fault of their own. Yet under current National policy, some overseas lenders to banks have recently been protected through covered bonds, which increase the risk to ordinary depositors. That’s not a fair system.
“This means that Kiwi households will be forced to help bail out banks while overseas lenders have their money protected.
“In the last four years thousands of Kiwis lost money in the finance company collapses. New Zealanders want to know that, in the event of a bank failure, their first $30,000 is completely safe.
“It’s time to protect Kiwi depositors,” says David Parker.