Bank deposit guarantee fees outlined
October 28th 2008 02:21
Canberra Monday 27th
Foreign banks have been included in the federal government’s deposit guarantee scheme for their short term wholesale funding raised from Australian residents and a fee schedule has been outlined for the guarantee. Two weeks ago the treasurer Wayne Swan announced that, on advice from the financial regulators, the federal government was legislating to guarantee all retail deposits in banks, credit unions and building societies. The unlimited guarantee has caused havoc in investment markets as retirees and investors rush big sums of cash to the protected insitututions and out of other investments.
The federal government announced last Friday that it will change the guarantee in response to the growing crisis that has led some investment funds to freeze all withdrawals amid fears of a rush that could bring down some major players int he financial industry. The government will now charge a fee for the deposit guarantee on funds deposited in protected banks and credit unions over one million dollars. Funds in institutions with an AA credit rating or better will incur a 0.7 per cent fee. Institutions with an A rating will be charged 1 per cent and funds in institutions with a BBB rating or not rating will incur a 1.5 per cent fee. The guarantee will continue to be free until November 28 when the new schedule will take effect.
Foreign banks have been included in the federal government’s deposit guarantee scheme for their short term wholesale funding raised from Australian residents and a fee schedule has been outlined for the guarantee. Two weeks ago the treasurer Wayne Swan announced that, on advice from the financial regulators, the federal government was legislating to guarantee all retail deposits in banks, credit unions and building societies. The unlimited guarantee has caused havoc in investment markets as retirees and investors rush big sums of cash to the protected insitututions and out of other investments.
The federal government announced last Friday that it will change the guarantee in response to the growing crisis that has led some investment funds to freeze all withdrawals amid fears of a rush that could bring down some major players int he financial industry. The government will now charge a fee for the deposit guarantee on funds deposited in protected banks and credit unions over one million dollars. Funds in institutions with an AA credit rating or better will incur a 0.7 per cent fee. Institutions with an A rating will be charged 1 per cent and funds in institutions with a BBB rating or not rating will incur a 1.5 per cent fee. The guarantee will continue to be free until November 28 when the new schedule will take effect.
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