Australian Bankers' Association says deposits up to
$1m are guaranteed

Sydney, 12 October, 2009: The Australian Bankers’ Association (ABA) is reminding consumers that deposits up to $1 million or less are automatically guaranteed under the Government’s Financial Claims Scheme.

The ABA is commenting in response to media reports today that customer deposits have flowed into larger banks because customers are concerned over the safety of their deposits.

Because a customer’s deposit up to $1m is automatically protected against loss, customers should feel free to make their deposit account choice on the basis of price and service.
 
David Bell, Chief Executive of the ABA, said: “There is a lot of competition in the marketplace for deposits and consumers should shop around for products which suit their needs based on price, product features and services offered by the banks.”

“Customers can choose to guarantee deposits over $1m with banks for a fee determined by the Government.”

In fact, there is evidence that customers are looking increasingly at deposit products, across all providers.
 
The recent Reserve Bank Financial Stability Review noted that all Authorised Deposit-Taking Institutions (banks, building societies and credit unions), not just the major banks, have seen increases in deposits.

     “Deposit growth for the ADI sector as a whole has been strong through the crisis period, though it has moderated over recent months as investor appetite for alternative assets has returned. Over the six months to July 2009, total deposits increased at an annualised rate of 10 per cent, compared to rates of around 25 per cent earlier this year. Most banks are endeavouring to increase their share of funding from deposits, in response to markets’ increased focus on funding liquidity risk.” ¹

For further information:

Heather Wellard
Director, Public Relations,
Phone: 02 8298 0411
Mobile: 0409 830 439
           
ENDS

[1] Reserve Bank of Australia, Financial Stability Review September 2009, page 28 http://www.rba.gov.au/PublicationsAndResearch/FinancialStabilityReview/Sep2009/Pdf/financial-stability-review-0909.pdf