ANNOUNCEMENT 28 Nov 2008In November 2008, the government of Australia announced a change in private-sector financial support.
NUMBER OF INTERVENTIONS
The official government website of the Scheme:
In response to crisis, the Prime Minister announced a Government guarantee of the deposits and wholesale funding of Australian deposit-taking institutions.
These guarantees are designed to:
·assist Australian banks, credit unions and building societies to continue to access funding in domestic and international credit markets;
·promote financial system stability;
·ensure the continued flow of credit throughout the economy at a time of heightened turbulence in international capital markets; and
·ensure that Australian institutions are not placed at a commercial disadvantage vis-ŕ-vis their international competitors that have received similar government guarantees on their bank debt.
At the end of the three years, the government will review the cap on the guarantee. The guarantee scheme commenced on 28 November 2008. After 28 November 2008, deposits over the $1 million threshold and wholesale funding will only be guaranteed if the relevant fee is paid. The fee will be based on the credit rating of the institution. For example, eligible securities at AA credit rated institutions will attract a fee of 70 basis points whereas at an A rated institution, the fee will be 100 basis points.
The guarantees apply to all authorised deposit-taking institutions ('ADIs') incorporated in Australia - that is Australian-owned banks, Australian ADI subsidiaries of foreign banks, credit unions and building societies; and foreign branches of eligible ADIs but not their foreign subsidiaries. The guarantees apply to deposits held by all types of legal entities in Australia and do not distinguish between deposits held by retail clients and those held by wholesale clients. The guarantees do not apply to deposits held in branches of foreign banks in Australia.