Sydney, 14 October, 2008: The Australian Bankers’ Association (ABA) is concerned that recent announcements by the Federal Government to guarantee deposits and wholesale funding are being characterised as the Australian banks having been ‘bailed out’.
 
This is false.

No bank deposits have been at risk. Bank deposits are safe – with or without the government’s guarantee.

This is a critical point because as the world moves into a phase of revising the policy framework for bank supervision, it needs to be recognised that Australian banks performed exceptionally well and insulated Australia against the full impact of the credit crisis which originated in the United States.

Australian banks and the regulatory framework have been successful. Unlike in the UK, Europe and the USA, no taxpayer’s money has been allocated to support an Australian bank. Australian banks are very strongly capitalised and continue to hold assets that are of good credit quality.

The deposit guarantee was announced to foster greater confidence in the community, not to head off potential losses. The wholesale funding guarantee was announced to remove the competitive distortion created by similar guarantees announced by other governments.

For further information:
Heather Wellard
Director, Public Relations
Phone: 02 8298 0411
Mobile: 0409 830 439