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#1 2016-02-23 00:14:59

finicky
Silver Stacker
From: Dreamworld
Registered: 2011-06-10
Posts: 3,457

Bank deposit guarantee

Just had an exchange across the counter with a seemingly informed bank officer.

1/ current government deposit guarantee she said is $150k

2/ it only applies to term deposits
If you have a savings account, or cash management account like online saver, forget it.

3/ She was unblinking and didnt rush to reassure me when i mentioned the possibilty of bail-ins like Cyprus, and that bank depositors here might be regarded as unsecured creditors. I felt that she was agreeing that this is the case.

Ok, so just one experienced and unhesitating bank officer in a country town CBA branch.

Last edited by finicky (2016-02-23 00:15:43)

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#2 2016-02-23 00:32:56

House
Moderator/ Legend
From: Stack City
Registered: 2012-04-30
Posts: 9,635
Trades :   232 

Re: Bank deposit guarantee

Might want to check that info as when I was speaking to ASIC a few months ago it was $250k for pretty much every kind of account. I asked about general everyday savings, cheque and our joint, all covered.


WBI- 41.16

"There's no point in paying a mortgage on an asset that is going to fall by 40 per cent or so in the next few years". Steve Keen, 2008.
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#3 2016-02-23 00:35:57

finicky
Silver Stacker
From: Dreamworld
Registered: 2011-06-10
Posts: 3,457

Re: Bank deposit guarantee

Ok house, will do. I have a share of a home sale sitting in an online saver account.

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#4 2016-02-23 00:41:58

House
Moderator/ Legend
From: Stack City
Registered: 2012-04-30
Posts: 9,635
Trades :   232 

Re: Bank deposit guarantee

ASIC/Moneysmart

FaFPK2g.jpg

Only provision I can see relating to only term deposits is the grandfathering period when the guarantee was dropped from $1m to $250k.


WBI- 41.16

"There's no point in paying a mortgage on an asset that is going to fall by 40 per cent or so in the next few years". Steve Keen, 2008.
Stacker FAQ'S. New threads welcome- http://forums.silverstackers.com/topic- … faq-s.html

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#5 2016-02-23 00:49:26

finicky
Silver Stacker
From: Dreamworld
Registered: 2011-06-10
Posts: 3,457

Re: Bank deposit guarantee

Bloody hell, I'm going to take this in and taunt her.
She seemed so confident. Then again she was the one trying to knock me back earlier  on a better interest rate for my online saver. Got it straight away by phone calling CBA central.

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#6 2016-02-23 00:55:07

House
Moderator/ Legend
From: Stack City
Registered: 2012-04-30
Posts: 9,635
Trades :   232 

Re: Bank deposit guarantee

Have you checked uBank? Always been the best rate any time I've looked. Although don't know if they'd qualify for the DG seeing as they're an online only setup (backed by NAB).


WBI- 41.16

"There's no point in paying a mortgage on an asset that is going to fall by 40 per cent or so in the next few years". Steve Keen, 2008.
Stacker FAQ'S. New threads welcome- http://forums.silverstackers.com/topic- … faq-s.html

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#7 2016-02-23 00:58:56

Skyrocket
Silver Stacker
From: Melbourne
Registered: 2014-07-20
Posts: 4,849
Trades :   36 

Re: Bank deposit guarantee

Can they take our bank deposits if they bring in "bail in" rules and extend them to savings if banks go south real bad?


Australia may have little choice but to adopt "bail-in" rules that expose bank creditors to losses, due to our dependence on foreign capital, financial system inquiry chair David Murray says.

http://www.smh.com.au/business/banking- … 06j03.html

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#8 2016-02-23 01:02:33

aleks
Silver Stacker
From: Karl-Marx-Allee
Registered: 2010-10-14
Posts: 2,392
Trades :   27 

Re: Bank deposit guarantee

Good to keep on top of this in case the rug gets pulled

Last edited by aleks (2016-02-23 01:05:04)


Only you have your best financial interest at heart, be your own guru

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#9 2016-02-23 01:03:52

tozak
Silver Stacker
From: Australia
Registered: 2011-05-05
Posts: 2,036
Trades :   177 

Re: Bank deposit guarantee

They can pretty much do what ever than want during a bail-in, try to get some sort of guarantee from APRA that it can't happen like that and good luck to you.


The whole world only one block apart

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#10 2016-02-23 01:12:15

tozak
Silver Stacker
From: Australia
Registered: 2011-05-05
Posts: 2,036
Trades :   177 

Re: Bank deposit guarantee

Financial system inquiry (response to the interim report) 26th August 2014
http://www.apra.gov.au/Submissions/Docu … sponse.pdf

"The design of the appropriate mechanism through which losses are imposed on relevant creditors in resolution is dependent on the form of loss-absorbing capacity held by Australian ADIs. Tier 2 capital instruments are required to have a contractual mechanism for conversion or write-off at the point of non-viability of the institution. On the other hand, other forms of loss-absorbing capacity may require the use of a statutory power by the resolution authority in order to be genuinely loss-absorbing in resolution. To this end, some jurisdictions have introduced a statutory 'bail-in' power, which gives resolution authorities the power to write down, or convert into equity, unsecured and uninsured creditor claims to the extent necessary to absorb losses. The resulting reduction in liabilities is intended to recapitalise the failed bank in such a way that it can continue to provide critical economic functions. Although this approach is attractive because it provides a means to transfer the risk of a bank failure away from the public sector to the bank's own creditors, it does not come without costs and risks. At a minimum, the holders of debt subject to bail-in may seek additional spreads to cover any perception of increased risk. In a systemic crisis, bail-in of the creditors of one bank may lead to a run on other banks as creditors seek to avoid a similar bail-in.Australia does not have a statutory bail-in power. APRA does have compulsory transfer of business powers, which, in certain circumstances, could be used to achieve a similar economic effect to a bail-in."


The whole world only one block apart

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#11 2016-02-23 01:19:03

Skyrocket
Silver Stacker
From: Melbourne
Registered: 2014-07-20
Posts: 4,849
Trades :   36 

Re: Bank deposit guarantee

When someone deposits money into a bank account it then becomes the banks money and all you have is an "I owe you" from the bank.

They can guarantee all they like but that is something I never forget.

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#12 2016-02-23 01:22:11

tozak
Silver Stacker
From: Australia
Registered: 2011-05-05
Posts: 2,036
Trades :   177 

Re: Bank deposit guarantee

Information Paper (International capital comparison study) 13th July 2015
http://www.apra.gov.au/adi/PrudentialFr … -paper.pdf

"The Basel QIS capital adequacy ratios are fully phased-in and as such do not includelegacy AT1 and Tier 2 capital instruments that do not meet the new eligibility requirements introduced by Basel III, but continue to be included in the capital base of banks under transitional provisions. A key determinant of the extent of any such legacy instruments is whether a bank operates in a jurisdiction with contractual, rather than  statutory, bail-in arrangements. 11 In the former, legacy instruments must be redeemed and replaced over time. In the latter, existing instruments are automatically eligible (provided they meet all other criteria). The exclusion of legacy instruments results in approximately half of these capital instruments issued by the Australian major banks being excluded from their Basel QIS-reported ratios. The legacy instruments of banks in jurisdictions that have made provision for statutory bail-in are  included in full. Banks in statutory bail-in jurisdictions will therefore tend to report relatively more AT1 and Tier 2 capital than other jurisdictions such as Australia during the period of transition. 12 Given the names of the individual banks are not disclosed in the Basel QIS, it is not possible to adjust for this transitional legacy capital issue. The effect of this issue will diminish over time as legacy instruments are replaced, but  does mean there is less comparability in non-CET1 ratios at the present time."


The whole world only one block apart

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#13 2016-02-23 01:36:05

tozak
Silver Stacker
From: Australia
Registered: 2011-05-05
Posts: 2,036
Trades :   177 

Re: Bank deposit guarantee

If you think that a $250K government guarantee on your deposit means that they are guaranteeing your $250K of fiat then think again. They are guaranteeing the banks liability of $250K to you, should the bank issue you with say a 10 year bank bond for $250K in lieu of giving you access to the $250K in order to prevent a collapse of the bank then the government sees the bank as honoring that liability and no settlement is required. Then when you go to cash in the bond in 10 years after rampant inflation it will have little to no value and this theft of purchasing power to re-stock the banks balance sheets is all legal and above board now.


The whole world only one block apart

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#14 2016-02-23 02:44:33

SpacePete
Silver Stacker
Registered: 2014-03-01
Posts: 13,437
Trades :   122 
Website

Re: Bank deposit guarantee

What if the bank simply closes your account (like the recent HSBC thread)?  Is there any guarantee in that case?


Catus amat piscem, sed non vult tingere plantas

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#15 2016-02-23 04:45:06

fiatphoney
Member
Registered: 2010-06-12
Posts: 1,135

Re: Bank deposit guarantee

finicky wrote:

Just had an exchange across the counter with a seemingly informed bank officer.

2/ it only applies to term deposits

As in TERM OF YOUR NATURAL LIFE.


And through his policy also he shall cause craft to prosper in his hand; and he shall magnify himself in his heart, and by peace shall destroy many: he shall also stand up against the Prince of princes; but he shall be broken without hand.   Daniel 8:25

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#16 2016-02-23 05:25:19

SilverDJ
Member
From: Australia
Registered: 2014-11-01
Posts: 2,527

Re: Bank deposit guarantee

House wrote:

Have you checked uBank? Always been the best rate any time I've looked. Although don't know if they'd qualify for the DG seeing as they're an online only setup (backed by NAB).

ubank is not on the list:
http://www.apra.gov.au/adi/pages/adilist.aspx

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#17 2016-02-23 05:55:26

SilverDJ
Member
From: Australia
Registered: 2014-11-01
Posts: 2,527

Re: Bank deposit guarantee

SilverPete wrote:

What if the bank simply closes your account (like the recent HSBC thread)?  Is there any guarantee in that case?

No, only if the bank fails in some major way.
If the bank closes your account, that's a private matter between you and the banking ombudsman and/or your lawyer.

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#18 2016-02-23 06:51:30

House
Moderator/ Legend
From: Stack City
Registered: 2012-04-30
Posts: 9,635
Trades :   232 

Re: Bank deposit guarantee

SilverDJ wrote:
House wrote:

Have you checked uBank? Always been the best rate any time I've looked. Although don't know if they'd qualify for the DG seeing as they're an online only setup (backed by NAB).

ubank is not on the list:
http://www.apra.gov.au/adi/pages/adilist.aspx

Not directly

UBank is a division of NAB Personal Banking and operates under NAB's banking license (AFSL 230686). UBank deposits sit on NAB's balance sheet hence UBank deposits are covered by the government guarantee.


WBI- 41.16

"There's no point in paying a mortgage on an asset that is going to fall by 40 per cent or so in the next few years". Steve Keen, 2008.
Stacker FAQ'S. New threads welcome- http://forums.silverstackers.com/topic- … faq-s.html

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#19 2016-02-23 07:25:23

Stacked
Silver Stacker
From: Australia
Registered: 2013-05-26
Posts: 193

Re: Bank deposit guarantee

As for getting your money out of the banks.......last month I had to tfr 700K for a settlement on a property. I'm with Commbank and apparently transactions over 500k require three security level 60, staff members to facilitate. "Apparently" it was my "lucky day" as the branch I attended actually had a relieving manager there at the time and that was at a level that "could" be upgraded but it took four hours and I monopolised three staff for much of this time for them to work out how this could be done, wait for the security upgrade to effect, and then to insert their cards many times for each step of the process. Just the week prior to, I did two o/s tfrs each for under $250K and had no problem.   

Last week some friends were heading overseas and their settlement may be brought forward, so they needed to tfr 1.4 mil for a property settlement prior to leaving. They bank with St George and after a few hours and calls from the branch to head office they were not able to get this done. So their only option and as they had time, was to write a personal cheque.

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#20 2016-02-23 08:42:26

HoldMeTender
Silver Stacker
From: Nunya
Registered: 2016-01-06
Posts: 945
Trades :   14 

Re: Bank deposit guarantee

House wrote:

Not directly

UBank is a division of NAB Personal Banking and operates under NAB's banking license (AFSL 230686). UBank deposits sit on NAB's balance sheet hence UBank deposits are covered by the government guarantee.

Thanks House, I was gonna chime in but didn't have hard facts to hand.

I assume Bankwest similarly falls under CBA?  Not that I keep much there.. 

Question, though: am I wrong in thinking that to keep most of my liquid funds in redraw on my mortgage offers a degree of protection in case of bank failure/similar scenarios?  It's not a deposit as such..


All that glitters is not gold...
...but all that is gold glitters!

Windbag in Spandex

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#21 2016-02-23 08:56:44

smk762
Silver Stacker
From: Westralia
Registered: 2014-09-04
Posts: 1,398
Trades :   15 

Re: Bank deposit guarantee

"Sorry, we had to convert the funds in your mortgage offset account to worthless shares in our bank so we can repay a loan to Goldman before we go bust. Your home loan has been transferred to Deutsche, who asked us to forward on this foreclosure notice."


Note: No view / opinion I express is to be construed in any way as representative of entities which I may be associated with, including but not limited to employers, clubs, or charitable organisations. All commentary is made as a private citizen, regardless of the method of creative expression, and in accordance with personal integrity and my perception of the public interest. This disclaimer is to be applied perpetually and retroactively.Hi ASIO roll

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#22 2016-02-23 09:13:13

HoldMeTender
Silver Stacker
From: Nunya
Registered: 2016-01-06
Posts: 945
Trades :   14 

Re: Bank deposit guarantee

^^^ sad

Well I guess that's what the silver is for.


All that glitters is not gold...
...but all that is gold glitters!

Windbag in Spandex

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#23 2016-02-23 09:55:34

SilverDJ
Member
From: Australia
Registered: 2014-11-01
Posts: 2,527

Re: Bank deposit guarantee

HoldMeTender wrote:

Question, though: am I wrong in thinking that to keep most of my liquid funds in redraw on my mortgage offers a degree of protection in case of bank failure/similar scenarios?

That BTW is a very rare in this country. Just to keep it in perspective.

Found this government report:
http://fsgstudy.treasury.gov.au/content … apter2.asp
and this:
http://www.abc.net.au/money/currency/features/feat3.htm

From 1894 until 1979 only three banks failed in Australia, all in 1931.

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#24 2016-02-23 11:40:18

projack
Silver Stacker
From: Brisbane
Registered: 2009-08-12
Posts: 3,142
Trades :   143 

Re: Bank deposit guarantee

Pyramid Building Society, wasnt a bank, but on 13 February 1990 the state treasurer Rob Jolly and attorney general Andrew McCutcheon held a press conference and assured the public that Pyramid was sound
A second run of withdrawals began in May 1990 and at that time premier John Cain apparently tried to get a deal up with the ANZ by offering a $90m government guarantee, but the ANZ had lost interest. In June the government suspended withdrawals for a week and appointed an administrator. Cain announced there was no government guarantee of deposits, unleashing a storm of outrage at the contrast with the government's initial advice.
The administrator's report on 1 July 1990 was that the societies had to be wound up. On the morning of 3 July the premier was still saying there was no government guarantee, but by the afternoon he'd been rolled by his own caucus and had to announce that there would in the end be a guarantee.


The US dollars and Treasury debt called "risk off" because the global fiat system can only survive as long as that remains the case.

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#25 2016-02-23 11:47:59

DanielM
Silver Stacker
From: Melbourne
Registered: 2012-10-23
Posts: 2,988
Trades :   31 

Re: Bank deposit guarantee

projack wrote:

Pyramid Building Society, wasnt a bank, but on 13 February 1990 the state treasurer Rob Jolly and attorney general Andrew McCutcheon held a press conference and assured the public that Pyramid was sound
A second run of withdrawals began in May 1990 and at that time premier John Cain apparently tried to get a deal up with the ANZ by offering a $90m government guarantee, but the ANZ had lost interest. In June the government suspended withdrawals for a week and appointed an administrator. Cain announced there was no government guarantee of deposits, unleashing a storm of outrage at the contrast with the government's initial advice.
The administrator's report on 1 July 1990 was that the societies had to be wound up. On the morning of 3 July the premier was still saying there was no government guarantee, but by the afternoon he'd been rolled by his own caucus and had to announce that there would in the end be a guarantee.

Nice. 3c per litre fuel levy for 5 years paid for the idiots


Don't be shy....Stack it high!!

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