A bit of an unlikely situation I know, but Id still be interested to understand the situation.
Suppose I have $100k on deposit at my bank ($50k in a 6-month term deposit and $50k in an iSaver type of account). And suppose I also have a mortgage on an IP owing $200k. If the bank goes bust and can’t repay my deposits is it simply a case of me owing the net balance (i.e. the net of my loan minus any deposits), or, as I suspect, is it a case of me still owing the bank’s creditors at the front of the line $200k and for me to get to the end of the queue if I want to get back my $100k cash. BTW, I am aware that the Government provides guarantees but it’s only up to $20k per person max.
Badgers.I am aware that the Government provides guarantees but it’s only up to $20k per person max.
BadgersIm intrested in this also, who told you that the Aust. government guarantees bank funds and the 20k only intrest me also. Currently I feel Im not the only one concered about our money in the bank. Lets know your source for this info. if its possible.
Kind regards
T…….
Tony B wrote:I am aware that the Government provides guarantees but it’s only up to $20k per person max.
BadgersI'm interested in this also, who told you that the Aust. government guarantees bank funds and the 20k only interest me also. Currently I feel Im not the only one concered about our money in the bank. Lets know your source for this info. if its possible.
Kind regards
T…….
I did a bit of research and I think I was mistaken and in fact the $20k guarantee was only proposed. Currently there is no underwriting of deposits by the Government. Since I made this post, I have asked the bank directly the position and am awaiting their response which I'll post it when it comes back.
Badges
I think you will find that there is not Aust. Gov. backing or gaurantee on your money in the bank. Rudd was asked a question on TV last night re. are Aust. banks save, and he never said they were Gov. backed only that they needed to meet certain criteria and need to have funds in reserve. Do you remember Pyimide Building society, that was backed buy the state Gov. Bob Jolly and I lost a shit load of money, Ive still got the letter to say it was all OK.
My point is we all seen to think our money is safe in the back, but look at the USA now. Also banks are offering very good cash rate on TD 8%. I feel its to get money in the door as reserves are low they have lent too much out, to home loans. Lets know mate what you find out.
Cherrs
T………………..Hi
In the event of a bank being unable to meet its obligations, as an Authorised Deposit-taking Institution it is a requirement of Section 13A of the Banking Act 1959 that all Australian assets are to be made available for the repayment of bank deposits in priority to all other liabilities. This requirement overrides any other securities or pledges made over the banks Australian assets (these pledge holders are placed behind deposits in the order of payment).
Which means although there is no guarantees you'll get your money back – you'll be first in line to receive funds back.
And no the RBA does not guarantee any bank deposit and does not see it's balance sheet as a means to save insolvent institutions (this is quite clearly stated on their website).
Cat159 wrote:Which means although there is no guarantees you'll get your money back – you'll be first in line to receive funds back.I'm trying to avoid the chances of having to be in the queue in the fist place, so the exam question for the bank is; if you lose my money will that loss be offset against what I owe? If the answer is no, then it might be safer for me to just payout my mortgages if things get stormy. This leaves me with less liquidity, but it's one way of negating the problem short -term.
This of course would raise another question, which is if I pay off my IP loans until things look better, would I be able to then remortgage at a later date and get my cash back out? The potential problem here is that there is the posiblity I could no longer negatively gear the redraw since the purpose of the money is not solely for investments. Whilst I would actually put myself back in the same situation I am now in, from a tax perspective things technically may have changed.
Interesting. Basically the banks response is (certainly at the level I spoke) they can't answer that question because they do not know, and (in a round about way) implied that I was wasting their time even asking because it was such a remote prospect.
Of course it's still not a satisfactory answer. I do wonder if it's something they would refuse to speculate on because they don't like such questions.
Anyway, if it l goes down the gurgler and I lose out the guy who advised me will be the first in line for a visit from me!
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