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Deposit Takers Act 2023

Miscellaneous - Levy for Crown to recover cost of public support of deposit taker in financial distress or other difficulties

471: Process matters for recommendation

You could also call this:

"How the Minister decides to recommend help for deposit takers in financial trouble"

Illustration for Deposit Takers Act 2023

Before the Minister makes a recommendation, they must be satisfied that the government has spent money or made an investment in a deposit taker that was in financial trouble. The Minister must think this spending or investment was necessary to keep the financial system stable or to keep important activities going. The spending or investment must have happened in the last five years.

The Minister also has to consider how much different types of deposit takers will benefit from the spending or investment, and how paying a levy will affect their soundness. You will have to pay a levy if you are a deposit taker, and the Minister must think about the total cost to the government, including any money they might get back. The Minister does not include certain types of grants or compensation when thinking about the spending or investment, such as those made under subpart 8 of Part 6 or subpart 9 of Part 7.

The Minister must follow these rules when making a recommendation, and they must consider the rules in sections 25B and 25C of the Public Finance Act 1989. You can find more information about these rules and how they affect deposit takers. The Minister's recommendation will be based on their consideration of these factors.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS704866.

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"Rules about charging fees to some businesses to help cover costs"

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Part 8Miscellaneous
Levy for Crown to recover cost of public support of deposit taker in financial distress or other difficulties

471Process matters for recommendation

  1. The Minister must, before making a recommendation,—

  2. be satisfied that the Crown has incurred expenses or capital expenditure or made a capital injection—
    1. in connection with dealing with the financial distress or other difficulties of a licensed deposit taker or an associated person that is or was in resolution; or
      1. under sections 25B and 25C of the Public Finance Act 1989 in connection with a licensed deposit taker or an associated person; and
      2. be satisfied that incurring the expenses or capital expenditure or making the capital injection were necessary or desirable for either or both of the following purposes (whether or not there were other purposes):
        1. to maintain the stability of the financial system:
          1. to maintain the continuity of systemically important activities undertaken by 1 or more licensed deposit takers or associated persons; and
          2. be satisfied that the expenses or capital expenditure was incurred or the capital injection was made within the 5-year period before the regulations will be made; and
            1. have regard to the following:
              1. the extent to which deposit takers of each class that will be required to pay a levy under this subpart directly or indirectly benefited, or are likely to benefit, from the expenses or capital expenditure that was incurred or the capital injection that was made:
                1. the effect that the obligation to pay a levy under this subpart is likely to have on the soundness of a deposit taker of each of those classes:
                  1. the net cost to the Crown of incurring the expenses or capital expenditure or making a capital injection (taking into account any recovery of those costs that has occurred or is likely to occur).

                  2. The reference to expenses, capital expenditure, or a capital injection in subsection (1)(a) does not include—

                  3. any grants or advances made under subpart 8 of Part 6 (deficiency in fund); or
                    1. any compensation paid under subpart 9 of Part 7 (compensation for pre-resolution creditors or shareholders that are worse off).