Doubts emerged yesterday about the quality of the Government's scheme guaranteeing bank retail deposits.
New Zealand's four big banks have all signed up to the scheme, which is intended to stop panic withdrawals.
Myles Wealth Management principal Craig Myles said something needed to be done but what Prime Minister Helen Clark announced on Sunday was completely out of step with moves announced in Australia.
"What she is doing is supporting South Auckland car finance companies at the expense of corporate New Zealand. That's a concern."
Corporate bond issues were not covered and that could make the cost of borrowing for companies like dairy giant Fonterra much more costly, he said in an interview.
Investors would be acting on the perception of the guarantee rather than what was in place. The New Zealand guarantee rewarded bad behaviour.
"The Government is now saying if you put your money into risky finance companies, we will guarantee it. They are socialising the risk, which is sending all the wrong messages."
The Australian Government was guaranteeing interbank lending, Mr Myles said.
Last night, ANZ-National Bank, Bank of New Zealand, Westpac and ASB had signed up to the deal along with Kiwibank, SBS - which became a bank last week - and UDC.
SBS general manager finance Tim Loan said the world financial crisis meant there would still be some people uneasy about the stability and security of financial institutions.
"The scheme means customers can be certain that they will have access to their deposits and the interest accrued."
SBS' total retail deposits were $1.9 billion, he said.
The scheme would be free for institutions with total retail deposits below $5 billion. A fee of 0.1% a year would be charged on total deposits above $5 billion.
KPMG deputy chairman Godfrey Boyce said he believed bigger banks would raise questions about how different-sized banks were treated under the scheme.
"It seems a little bit of an inequity sitting in there somewhere, which I think the big four will reflect on."
National Party leader John Key said he was comfortable the scheme would work with its broad thrust, but said there were still questions and possible changes.
These included extending the coverage of wholesale deposits as offered in Australia and some possible unintended consequences.
