Changes to the Government Guarantee of Bank Deposits
07 Mar 2012
By Shadforth Financial Group
The Government Guarantee arrangements was introduced in October 2008 at the height of the global financial crisis to help promote stability in the Australian financial system via the provision of a guarantee on deposits (up to $1,000,000) held in authorised deposit-taking institutions (ADIs) incorporated in Australia.
From 1 February 2012 there were changes to the operation of the scheme:
A permanent guarantee of up to $250,000 for deposits became effective from 1 February 2012. For example, if a deposit as a balance of $500,000 the first $250,000 will be guaranteed. The new $250,000 cap applies per account-holder, per ADI. Please note that a number of banks are subsidiaries of larger institutions, which means they are grouped together as a single ADI. For example, St George and Westpac are considered a single ADI institution. Existing term deposits which existed on 10 September 2011 will be covered up to $1 million until 31 December 2012 or until the deposit matures – whichever occurs sooner.