Statement of reasons

This notice comes into force on 1 March 2013 and is revoked on the earlier of the close of 30 July 2014 or 12 months after Part 2 of the Non-bank Deposit Takers Act 2013 comes into force. That Act has not yet been passed, and is currently before Parliament.

This notice exempts Propertyfinance Securities Limited (PSL) from certain requirements of Part 5D of the Reserve Bank of New Zealand Act 1989 (the Act). PSL is an entity that previously issued debt securities to members of the public, but is now in a moratorium approved by its shareholders and has not yet repaid all of its depositors. PSL is deemed to be a deposit taker under section 157C(3) of the Act.

PSL is exempted from the following:

• the requirement in section 157I of the Act to have a credit rating:

• certain governance requirements in section 157L(1) and (3) of the Act:

• capital ratio requirements in sections 157T and 157U of the Act:

• liquidity requirements in sections 157ZA and 157ZB of the Act.

The exemptions are subject to conditions that include the following:

• that no debt securities are offered for subscription by, or on behalf of, PSL. This restriction does not apply to offers of debt securities that could only be accepted by persons who come within the definition of eligible person in the Securities Act 1978 (which relates to wealthy persons and persons experienced in investing money or experienced in the industry or business to which the security relates) or by persons referred to in section 3(2)(a) of the Securities Act 1978 (to whom an offer of securities would not constitute an offer of securities to the public for the purposes of that Act):

• that PSL ensures that any Internet site maintained by or on behalf of it displays a notice to the effect that it is exempted from sections 157I, 157L(1) and (3), 157T, 157U, 157ZA, and 157ZB of the Act:

• that PSL does not disclose an assessment of its creditworthiness that is in substance a credit rating:

• that at least 1 of the directors of PSL is an independent director:

• that PSL must not increase or renew existing exposures to related parties or create any new exposures to related parties.

This notice revokes the Deposit Takers (Moratorium) Exemption Notice 2009. That notice applied to several entities in moratorium, including PSL. Many of the exemptions and conditions to those exemptions contained in this notice have been carried over from that notice.

The Reserve Bank, after taking into account the principles set out in section 157F of the Act, and satisfying itself as to the matters set out in section 157G(2) of the Act, considers it appropriate to grant the exemption because—

• the Bank is satisfied that the exemption is consistent with the maintenance of a sound and efficient financial system in that PSL will be prevented from accepting deposits from the public:

• the additional direct and indirect costs of obtaining a credit rating, maintaining a minimum capital ratio, and complying with the liquidity and governance requirements are unduly onerous and burdensome in the circumstances. PSL is unable to accept deposits from the general public as a condition of this exemption, and existing depositors have agreed not to withdraw their deposits until they fall due under the new arrangement. In these circumstances, compliance with the requirements is not likely to provide material additional benefits to depositors:

• the exemption is conditional on PSL not issuing any further debt securities to the public, but at the same time it does not preclude the possibility of investment, for example by a wealthy or experienced investor, that may assist PSL in moratorium; therefore the exemption is not broader than reasonably necessary to address the matters that gave rise to the exemption.