Non-banks squeezed as Govt reshapes guarantee
The government yesterday introduced a swag of changes to its bank guarantee scheme including capping deposits it would insure at $1 million and exerting further controls over non-bank providers who sign on.
Wednesday, October 22nd 2008, 8:43PM
by David Chaplin
He said the amendments should delineate more clearly the boundary between wholesale and retail deposits and instigate a fairer but still affordable pricing regime.
The updated fee schedule for the new business component of those institutions with deposits under $5 billion now ranges from 10 basis points to 1% depending on their rating status.
Non-bank deposit-takers with a rating below BB or unrated would remain subject to a 3% fee, the Treasury statement said. However, under the new rules such firms would receive a back-dated fee rebate if they achieve a BB-rating or above during the two-year term of the guarantee.
The government also indicated it would fast-track new Reserve Bank oversight powers for the non-bank sector.
“The Reserve Bank is investigating options that will, if feasible, bring forward prudential requirements that would impose a greater measure of prudential discipline on non-bank deposit takers,” Treasury/Reserve Bank statement said.
Collective investment schemes that invest into authorised deposits would also be fee-exempt in order to avoid double-dipping by the government, the statement said, while bare trusts were granted some reprieve.
Treasury also scrapped the unlimited guarantee for deposits imposing a $1 million cap per investor per institution. Australia instigated a similar $1 million limit for its deposit guarantee scheme earlier in the week.
The first institutions to be formally included in the guarantee scheme should be named next Tuesday.
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