A New Zealand leasing company has gone into receivership as it was unable to meet the country’s Reserve Bank capital ratio requirements.
Finance & Leasing, based in Christchurch, could not meet the requirements in the specified timeframe, and therefore could not gain approval from the Companies Office for a prospectus extension, lodged in December.
It had a year’s notice of the new regulations and ran down loans in the property sector during that time. It has been reported that 227 investors are owed about NZ$17m (€9.6m), none of which was covered by the New Zealand government’s extended retail deposit guarantee.
Without a registered prospectus to raise funds from the public, the company was unable to continue operating, meaning it had no choice but to enter receivership.
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The capital ratio regulations came into force on 1 December 2010. They require “every non-bank deposit taker (NBDT) and its trustee to ensure that the trust deed includes a minimum capital ratio requirement that the NBDT must maintain, according to the Reserve Bank of New Zealand”.
The minimum capital ratio in the trust deed must be at least 8% for NBDTs with a credit rating from an approved rating agency, and at least 10% for those without.
