Finance Minister Michael Cullen said all nonbank deposit takers will have to be registered by the Reserve Bank and comply with minimum prudential requirements under new laws that will come into force over the next two years.

The new regulations will apply to nonbank deposit takers, including finance companies, building societies and credit unions. Nonbank finance companies are currently supervised by trustee corporations.

Nine local nonbank financial institutions have collapsed in the past 16 months, including five in the past four weeks as investors stopped lending or demanded their money back. The companies collapsed after defaulting on debt payments as insecurity in global credit markets sparked by the U.S. subprime mortgage crisis spread to New Zealand, where credit worries continue to hit the finance sector.

"This is not intended to be a 'quick fix' solution and it will not solve all the problems that some finance companies are currently facing," Cullen said.

Under the new laws, deposit-takers will be required to have a credit rating from a rating agency approved by the Reserve Bank.

Other requirements include a minimum amount capital of NZ$2 million, a yet-to-be-specified capital ratio measured on a standardized and comprehensive basis, and specific requirements for directors and senior managers of deposit-takers.

In a separate statement, Reserve Bank Governor Alan Bollard said the proposals will provide a more consistent approach to supervision of nonbank companies and strengthen confidence in the sector.

"Improved disclosure and credit ratings will assist depositors to make better-informed investment decisions," he said.