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.
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.