New Zealand Deposit Guarantee Scheme

On 12 October 2008, the New Zealand Government announced a deposit guarantee scheme (the "Scheme") that includes banks and non-bank deposit takers (including Southern Cross Building Society).

The scheme originally expired in October 2010. However, it has been extended to qualifying companies until 31st December 2011.

The Society has been approved under the extended New Zealand deposit guarantee scheme. (the "Extended Scheme")

Southern Cross Building Society has a guarantee under a Crown retail deposit guarantee scheme, being a guarantee that expires on 31 December 2011. A copy of the Society's announcement may be viewed here.

The Extended Scheme has the following key features:

• Only deposits held by NZ citizens and NZ tax residents will be covered.
• Maximum guarantee amount of $250,000.00 per depositor (including joint accounts)
• The Society has the option under the Extended Scheme to offer both a guaranteed and a non-guaranteed (known as “Excluded Security”) deposit product.

This means the Society’s deposits that have maturities extending beyond 12 October 2010 but maturing on or before 31 December 2011 are now guaranteed by the Crown.

The Society now offers a range of both Guaranteed and Non-Guaranteed savings and investment products.

The Guaranteed products will have the benefit of the Crown Guarantee which comes at a cost. That cost is reflected in a lower rate of return for our Guaranteed products.

The Non-Guaranteed products do not include this cost and therefore the Society can provide those products at a higher rate of return. The difference in interest rates (return) between both Guaranteed and Non-Guaranteed savings products, will be implemented prior to the expiry of the existing crown guarantee, which occurs on 12 October 2010. Term investments have the pricing differential built in immediately, as they may expire after the 12 October 2010, depending on the investment term selected.

The Non-Guaranteed products offered by Southern Cross Building Society are not covered by the guarantee given under the Crown retail deposit guarantee scheme.

Further information about the deposit guarantee scheme is available, free of charge, and at all reasonable times, on the internet site maintained by, or on behalf of, the Treasury, which is currently www.treasury.govt.nz.

To view the New Crown Deed of Guarantee click here.