MAS: Higher Cover For Bank Deposits

MAS Response To Higher Cover For Bank Deposits
source: MAS Newsroom

A writer to the Straits Times Forum asked recently whether MAS would consider raising the $20K cap cover for bank and savings account holders in Singapore. We quote the response from Monetary Authority of Singapore (MAS).

Dear Editor
I refer to "Higher cover for bank deposits"
(Straits Times Forum, 4 October 2008)

2. Singapore's banking and financial system remains sound. Depositors and insurance policyholders should be reassured that banks and insurance companies in Singapore are required by the MAS to have assets exceeding their liabilities by an appropriate margin. They are also required to abide by stringent regulations on capital, asset quality and risk concentration, and to put in place sound risk management systems and processes.

3. To protect depositors and policyholders, MAS' approach has been to emphasise stringent regulation and supervision of financial institutions so that weaknesses can be identified and addressed at an early stage. Nevertheless, in the worst case scenario where a bank or insurance company fails, a safety net is provided by deposit insurance and the policyowners' protection fund respectively. Deposit insurance, which is an explicit guarantee on deposits, provides a payout of up to S$20,000 to each individual depositor per bank. For deposits in excess of the payout, individual depositors can also claim from assets of the failed bank. Depositors and policyholders, in the case of an insurance company, would rank ahead of unsecured creditors and shareholders in their claims.

4. Our deposit insurance scheme is funded through premium contributions paid by the industry. A higher coverage limit will come with higher cost which may be passed on to depositors. MAS, together with the Singapore Deposit Insurance Corporation (SDIC) that administers the deposit insurance scheme, will review the coverage limit regularly, taking into consideration the objectives of the scheme and international norms.

5. Some countries have recently issued a blanket guarantee on deposits. These are emergency measures taken to combat the threat of a widespread loss of confidence in a country's financial and banking system. The cost will ultimately be paid by taxpayers. The situation in Singapore continues to be stable and does not warrant such measures.

Angelina Fernandez
Director (Communications)
Monetary Authority of Singapore


The bottom line of these statements? Your first $20K of Singapore Dollar savings and deposits is guaranteed. Amounts in excess of that level is NOT guaranteed.

Thank you for reading Singapore Savings Account Rates blog.

**Latest News**
Singapore government guarantees all bank accounts till end 2010
... read more about the MAS guarantee ...

MAS Comments: Global Financial Markets

Monetary Authority of Singapore Comments on the Global Financial Markets and Major Jurisdictions

MAS has responded to queries about developments in global financial markets and major jurisdictions over the weekend. On the MAS website, we quote the latest news from the Monetary Authority of Singapore:

source: MAS Latest News

"We have been monitoring these developments closely as well as their impact on Singapore's markets and financial institutions.

We welcome the announcement by G-7 finance ministers and central bank governors that they are working together to stabilise financial markets and restore the flow of credit, as well as the specific initiatives announced by the Eurozone and UK governments.

These actions will help inject confidence into global markets.
In Singapore, our financial system remains stable and robust. Banks, finance companies and insurance companies in Singapore are required by MAS to have assets exceeding their liabilities by an appropriate margin. They are also required to abide by stringent regulations on capital, asset quality and risk concentration, and to put in place sound risk management systems and processes. MAS’ approach is to emphasize stringent regulation and supervision of financial institutions so that weaknesses can be identified and addressed at an early stage.

Our domestic Singapore dollar money and foreign exchange market have generally been calm and banks have been able to obtain funding in the interbank market. MAS has kept a higher level of liquidity in the banking system. No extraordinary measures have been needed. Singapore dollar interest rates remain stable.

MAS stands prepared to inject additional liquidity as required. We will take any necessary measures to safeguard the stability of Singapore’s financial system. "

So readers of Singapore Savings Account Rates, be assured that your money in bank savings accounts will be safeguarded.

Singapore Savings Account Depositors Protected

Singapore Savings Account Depositors Protected

In The Straits Times published 23 September 2008, Ms Angelina Fernandez, Director (Communications) of the Monetary Authority of Singapore (MAS) assured Singapore savings account depositors that their savings in their Singapore savings accounts are protected.

Here is a quote from the MAS letter for Singapore Savings Account Rates readers:

"Under the deposit insurance scheme, administered by the Singapore Deposit Insurance Corporation (SDIC), an individual's Singapore dollar current, savings and fixed deposit accounts with a full bank or finance company in Singapore have an aggregate coverage of up to $20,000 per institution. This coverage fully insures more than 80 per cent of individual depositors in Singapore and is within international norms of 80 to 90 per cent."

Does this mean your $20000 in a Singapore savings account is totally safe? How about the robustness of the Singapore Deposit Insurance Corporation (SDIC) which is also an insurance company? Given that even a huge insurance company like AIG has also buckled under financial strain, how is a depositor to know if this SDIC will not buckle?

You may want to refer to SDIC at their website for details on their structure and board members for some reassurance. The Singapore Deposit Insurance Corporation (SDIC) administers the Deposit Insurance Scheme in Singapore. It has a 6-member board and they are accountable to the Minister in charge of MAS. SDIC collects premiums from participating banks annually to maintain a fund that will be used to compensate depositors if required.

Read more at SDIC site.

More information at Monetary Authority of Singapore (MAS).

Thank you for reading Singapore Savings Account Rates.