Expiry of Government Guarantee on Deposits

Expiry of Government Guarantee on Deposits

We highlight news on the expiry of government guarantee on deposits. Subject to limits, not all money kept in Singapore bank savings accounts will be guaranteed by the government from the first of January 2011.

This update is obtained from Monetary Authority of Singapore site.

"On 16 October 2008, the Singapore Government announced that it would guarantee all Singapore Dollar and foreign currency deposits of individuals and non-bank customers in banks, finance companies and merchant banks until 31 December 2010.

1. Why is the Government guarantee not extended beyond 31 December 2010? What is the impact?

The Government guarantee was an extraordinary measure in response to blanket guarantees by other jurisdictions in the region, to ensure a level international playing field for financial institutions in Singapore. It was a precautionary step as Singapore's financial system remained stable and sound during the global financial crisis, reflecting its strong fundamentals.

In light of improving financial market conditions, Singapore's financial system is not expected to be materially affected when the hitherto unused Government guarantee on non-bank deposits expires on 31 December 2010.

2. What happens after the guarantee expires? Are depositors still protected?

The expiry of the guarantee will not affect the operation of Singapore's deposit insurance scheme. Small depositors will continue to be protected under the scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC).

Consumers should always exercise discretion in their choice of financial institutions, and products and services, whether or not there are explicit protection schemes."


Amount insured under the Deposit Insurance Scheme Singapore (source from SDIC) :

"In the event a Scheme member fails, all of your eligible accounts with that member, except for deposits under the CPF Investment Scheme, are aggregated and insured up to S$20,000, net of your liabilities to the member, such as loans.

Deposits are not insured separately in each branch office of a Scheme member i.e. all your eligible accounts maintained with different branches of a Scheme member are aggregated and insured up to S$20,000 net of your liabilities to the member.

Moneys held in bank deposits under the CPF Investment Scheme (CPFIS) are separately insured up to S$20,000."

The Team

Singapore Savings Account Rates.

Exit Strategy for Full Deposit Guarantee

Exit Strategy for Full Deposit Guarantee

In a joint press release issued by the Monetary Authority of Singapore (MAS) on 22 July 2009 on the MAS site, it was announced that a Tripartite Working Group was formed by the monetary authorities of Singapore, Hong Kong and Malaysia to look into the exit strategy for full deposit guarantee by the end of 2010.

Here are the announcement details on the exit strategy for full deposit guarantee:

"Joint Press Release by the Hong Kong Monetary Authority, Bank Negara Malaysia and the Monetary Authority of Singapore

Tripartite Working Group on Exit Strategy for the Full Deposit Guarantee

22 July 2009

Taking the opportunity of the 14th EMEAP* Governors’ Meeting being held in Hong Kong, the Hong Kong Monetary Authority, Bank Negara Malaysia and the Monetary Authority of Singapore announced today (Wednesday) the establishment of a tripartite working group to map out a coordinated strategy for the scheduled exit from the full deposit guarantee by the end of 2010 in their respective jurisdictions."

***

* EMEAP, the Executives' Meeting of East Asia-Pacific Central Banks, is a cooperative organisation of central banks and monetary authorities in the East Asia and Pacific region.

It comprises the Reserve Bank of Australia, People’s Bank of China, Hong Kong Monetary Authority, Bank Indonesia, Bank of Japan, The Bank of Korea, Bank Negara Malaysia, Reserve Bank of New Zealand, Bangko Sentral ng Pilipinas, Monetary Authority of Singapore, and Bank of Thailand.

(Source: Monetary Authority of Singapore)

So what does the statement on exit strategy for full deposit guarantee mean to ordinary bank savers and deposit account users like you?

For us, it means the Government guarantee on unlimited and full savings deposits in Singapore will very likely be withdrawn come end of December 2010.

The only question that remains to be answered is the quantum of savings deposits to be guaranteed. Before the financial crisis, the bank guarantee for savings deposits was up to S$20,000. MAS had earlier mentioned that discussions were on-going to look into raising the amount of deposit guarantee.   

In your personal finance portfolio management, you should take this 'Exit Strategy for the Full Deposit Guarantee' into consideration when using savings accounts, fixed deposits and other similar products.

Bank Deposits Protected

Bank Deposits Protected

In today's The Straits Times, it was reported that MAS plans to raise the limit on bank deposits protection in Singapore.

Currently, all sums in bank deposits in Singapore are protected and guaranteed until end December 2010. Once the guarantee ends, the previous rule that protects bank deposits of up to S$20,000 will be back in place.

With the additional coverage of bank deposit protection, the cost to banks will be raised. Will this cost be passed on to depositors? No one is saying that it will happen, but logically banks, as commercial entities, will not absorb the extra cost without thinking of ways to recoup it.

The other thing which came out of this report is that there is no word that the unlimited bank deposit guarantee will continue after 2010.

With the impending end of unlimited bank deposit protection after 2010, savers and investors should consider deploying their savings and fixed deposits with that in mind.

Thanks for reading our little insight on Singapore Savings Account Rates today.

Safe Singapore Investments

Safe Singapore Investments

Are there safe Singapore investments nowadays? Given the upheavals in banking since September 2008, with the precipitous fall of the global economy, can anyone find save Singapore investments to park their hard-earned cash?

Here at Singapore Savings Account Rates, we do not have all the answers. A safe Singapore investment for us may not be considered as a safe Singapore investment by others.

What we do know about save Singapore investments, is that we consider Singapore investments that are safe to be those that will not lose your capital, offer positive earnings and should not make us lose too much sleep in the process.

We consider money invested in selected bank savings accounts, fixed deposits, treasury bills and Singapore government bonds to be in the category of safe Singapore investments.

The Singapore government had given guarantee that all our money in selected bank savings accounts and fixed deposits will be fully protected until the end of year 2010.

No doubt these safe Singapore investments earn very low returns at current rates. The low returns are the price to pay for safety, security and uninterrupted sleep.

If you hunger for high investment returns, with the attendent high risk of losing your hard-earned money, go ahead and choose Singapore investments that suit your high-risk appetite.

Safe Singapore investments may not suit everyone. Consider your own financial profile, investment goals, life stage, time constraints and other factors before you allocate assets to safe Singapore investments.

We shall monitor and bring you more Singapore Savings Account Rates for those interested in the pursuit of safe Singapore investments.

Ministerial Statement: Why Singapore Government Guarantee on Deposits

Ministerial Statement: Why Singapore Government Guarantee on Deposits

A Ministerial Statement was given by Mr Lim Hng Kiang, Minister for Trade & Industry and Deputy Chairman, Monetary Authority of Singapore on Government Guarantee on Deposits.

This is posted on the Monetary Authority of Singapore's website.

Mr Lim Hng Kiang gave a ministerial statement on why the Singapore Government announced a guarantee on deposits of individuals and non-bank customers with banks, finance companies and merchant banks in Singapore until 31 December 2010.

In his statement, several reasons were put forward to explain the Government Guarantee on deposits.

First, the guarantee ensures a level international playing field for banks in Singapore.

Second, the guarantee bolsters the confidence that the public has in Singapore’s financial system.

Third, financial services are an important pillar of Singapore’s economy, accounting for 12% of GDP and 5% of Singapore's employment.

Fourth, this financial crisis is not confined to any country or region, but is a global one.

Singapore’s guarantee of deposits demonstrates confidence in the soundness of the financial system, and helps contribute towards restoring confidence in the international financial system.

Singapore Guarantees All Savings, Fixed, Current, SRS, Bank Account Deposits

Singapore Guarantees All Savings, Fixed, Current, SRS, Bank Account Deposits

The Government of Singapore has announced that it will guarantee all Singapore dollar and foreign currency deposits of individual and non-bank customers in banks, finance companies and merchant banks licensed by the Monetary Authority of Singapore (MAS).

This guarantee will run from now until 31 December 2010, according to the MAS and the Ministry of Finance.

It will be backed by $150 billion worth of Government reserves.

Other countries that have such government guarantees are:

• Australia
• New Zealand
• some European nations
• Hong Kong
• Malaysia

Guaranteed deposits are:

• Savings accounts
• fixed deposits accounts
• current accounts
• bank accounts under the Supplementary Retirement Scheme (SRS)

Unprotected deposit accounts are:

• structured products
• any deposit that is pledged, charged or secured as collateral

source: MAS and MOF Joint Statement