Treasury is confident there were no grounds to remove South Canterbury Finance from the retail deposit guarantee scheme.
South Canterbury was put into receivership yesterday and the Government immediately paid out $1.7 billion to investors and in a loan to the receivers.
Questions have been raised about whether South Canterbury should have been accepted into the deposit guarantee scheme and blogger Cactus Kate has suggested South Canterbury did not meet all the requirements of its deed of guarantee with the Crown.
Treasury spokesman Angus Barclay told NZPA the Crown had exercised all its powers appropriately to protect its interests as a guarantor.
There were various requirements on companies under the guarantee scheme, he said.
The guarantee could be withdrawn from companies which did not meet those requirements.
"It's not something we do lightly."
The withdrawal would not be retrospective. That means new depositors would not be covered but existing ones would be.
"The guarantee is not revoked it, it is withdrawn for the future," Mr Barclay said.
He said guarantees had been withdrawn from two companies previously -- from Viaduct Capital when its actions meant people were covered by the scheme who it was not intended for and another company which paid back all depositors.
In the case of South Canterbury Finance, the Crown exercised its powers appropriately, Mr Barclay said.
