hi i saw this article and thought i would share it here, if this is true it seems scary http://www.informationclearinghouse.info/article37475.htm any thoughts?
Just like anything else – spread your risk. Don't store all you cash with one bank. Have a bunch of fee-free accounts in different banks (banks that are not owned by the same mob).
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
JacM wrote:Just like anything else – spread your risk. Don't store all you cash with one bank. Have a bunch of fee-free accounts in different banks (banks that are not owned by the same mob).AU runs a depositor insurance scheme up to $250k. Wouldn't think there's too many PI's with that many ready's floating around.
It depends. I've never looked into how an offset account would be treated…
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
What is the Deposit Guarantee?
Government Deposit Guarantee
At the height of the recent GFC, the federal government introduced the Australian Government Guarantee Scheme for Large Deposits and Wholesale Funding (the Guarantee Scheme). The objective of the scheme was to promote financial stability with in Australia and to ensure that financial institutions could continue to access funding. The emergency component of the scheme has now ceased however one component of the scheme that continues to be applied is the Financial Claims Scheme; a guarantee on bank deposits of up to $250,000 per customer and per institution.
What deposits are covered?
The financial claims scheme applies to a wide range of deposits, including:
- savings accounts
- cash management accounts
- call accounts
- farm management deposits
- term deposits
- pensioner deeming accounts
- current accounts
- mortgage offset accounts
- cheque accounts
- deposit accounts
- debit card accounts
- trustee accounts
- transaction accounts
- retirement savings accounts
- personal basic account
- first home saver deposit accounts
It applies to deposits held with approved deposit institutions incorporated in Australia, which includes Australian banks, building societies and credit unions as well as foreign subsidiary banks. It does not, however, apply to deposits sitting in branches of Australian banks overseas.
For up to date information about the scheme, click here.
The same does not apply in NZ. There is no guarantee scheme at all. Depositors are fully exposed.
hi JACM i am not worried about the deposit or savings ac etc- it is more like HSBC is such a giant that if they collapse they will take a lot of countries and banks down with them triggering something massive like a GFC- i am wondering how that will affect our aussie banks which are considered so safe? or may be it could be nothing and i am just thinking too much.
AU banks are as vulnerable as any bank in the world. Their assets and equity levels are so small that even small moves against the value of their assets leaves them technically insolvent.A liquidity crises and or collapse in any part of the global system leaves them vulnerable depending on how the dominos fall. Their derivative exposure alone is through the roof.
Australia's banks' combined exposure to toxic derivatives obligations has climbed to $20 trillion.
The CBA is the 11th largest bank and 5th most profitable. Around 35% of the bank is owned (controlled) by JPM and HSBC
coolharry wrote:or may be it could be nothing and i am just thinking too much.Last year the CBA effectively began to hide its derivative exposure.
For the first time ever, CBA in its 2012 Annual Report deliberately omits the face value, also known as notional principal amount, of its derivatives obligations, and only reports the much smaller, and therefore less alarming, “fair value”.
The majority of the growth in derivatives exposure has been in CBA, which has seen its derivatives more than double between 2008, when it reported a face value derivatives exposure of $1.426 trillion, and 2011, when it reported $2.884 trillion.
At this breakneck rate of growth, the level of exposure CBA reached in 2012 is information that is important to the public’s understanding of the state of the bank.
CBA’s derivatives binge coincides with its record run of profits, but raises the question: are those profits real?
Former Morgan Stanley derivatives trader Frank Partnoy in his 1997 exposé of derivatives, FIASCO: Blood in the Water on Wall Street, insisted that derivatives are sold to cover up losses and to make losses appear to be gains for short periods of time (Partnoy got out of derivatives trading because he was convinced he would go to jail if he stayed in it). Partnoy’s admission has been borne out in numerous cases, including the 1995 collapse of the British Barings Bank; the 2001 bankruptcy of U.S. energy giant Enron after years of using derivatives to cover its losses; and the 2008 Lehman Brothers-triggered meltdown of the $1,400 trillion global derivatives bubble that bankrupted not only Wall Street and the City of London, but entire nations, especially in Europe.
Do you still believe you're thinking too much??
WOW Fascinating info- thats why cba share price keeps going up but their price to book ratio is 2.6 times? now i know how they achieve that. so this tells me that the aussie big banks that are considered by many as "Too Big to fail" is like saying "Too fat to Die". thanks Freckle for that info
Australia's Bank Deposit Scheme was put in place to retain confidence in the banking system but since the Cyprus bail-in things are changing. The AU banking industry and other international players are slowly maneuvering the regulatory system to adopt bail-in law as it's safety net.
Australian Banks “Welcome” Cyprus-Style Bail-In Plan
Australian Banks Demand Protection From Derivatives Losses Under Bail-In Plan
Australia Plans Cyprus-Style “Bail-In” Of Banks In 2013-14 Budget
When push comes to shove they'll confiscate your hard earned and there'll be little if anything you can do about it.
Now think real hard about this….
…if the banking system is as strong as they say, has plenty of security, is well governed, backstopped by the government then why oh why do we need to let these mongrels have legal unfettered access to depositors funds to bail them out??
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