The banks seem to be expecting trouble.

Shaddam IV

Shaddam IV

Well-Known Member
Silver Stacker
I just received a letter from the bank today notifying me of a rollover of my term deposit. There was a pamphlet included that said that there were new terms and conditions to be applied to term deposits created from August 1st. One of them reads: "In response to new regulations designed to maintain the strength of Australian banks" we have decided that you will need to provide 31 days notice to us if you want to access your funds in a (name of bank) Term Deposit.

This is clearly an anti-bank run device. People tend to keep larger sums in term deposits so they are making it impossible to withdraw your own money for a month even of you are prepared to forgo the interest. Not a good sign.
 
Oh dear ... time to canvass another bank ?

Im not sure i like that arrangement . I would be doing the rounds to find one that doesnt have that .
 
This may be industry wide from January 1st 2015. I've seen it with a number of banks.

Maybe there is a new regulatory requirement?
 
It's a term deposit remember?
People shouldn't even be able to withdraw it within the term.
At least not without a cost.
Why do banks allow this at all?
Because they want to falsely suggest their customers that the money is available at any time.
If that wasn't obvious.
So consider that regulation as a reminder for those that started to find this suggestion normal business. :D
 
boston said:
I agree with Willrocks - which bank is it?
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It could be all of them since it appears to be due to some sort of regulatory change related to Basel III as pointed out by Bullion Baron above. I've definitely seen it noted by Westpac but I don't know if it is restricted to certain term deposits:

31 day notice period for early terminations
New rules apply from 1 January 2015. You will need to give Westpac 31 days notice to access your funds prior to maturity, except in cases of
hardship. If you have less than 31 days remaining on your term, the earliest you can access funds is after maturity if hardship doesn't apply.
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A quick google found a huge amount of confusing information.

..

Ok, found this very recent document by the RBA (7th Aug 2014) which appears to be directly related:

The Implementation of the Basel III Liquidity Standards

From January 2015, those ADIs to which APRA applies the Basel III liquidity standards will be required to hold a quantity of high-quality liquid assets (HQLA) sufficient to withstand a 30 day period of stress. The liquidity coverage ratio (LCR) will measure an ADI's compliance with this standard (see Box A).

Box A: The Liquidity Coverage Ratio

Under the Basel III liquidity standards, an ADI must maintain a stock of high-quality liquid assets (HQLA) at least equal to its projected net cash outflows over the next 30 days (under a stress scenario). That is,:

liquidity-coverage-ratio.gif


ADIs in Australia that are subject to this standard will be required to maintain their liquidity coverage ratio (LCR) at or above 100 per cent beginning 1 January 2015. Banks will generally look to hold a 'buffer' somewhat above 100 per cent, meaning that small variations in their liquidity position arising from the normal course of business can be easily managed.

In projecting their cash flows over the next 30 days, ADIs must not only take into account their contractual payments falling due, they must also incorporate standardised assumptions about the rates at which deposits and other sources of funding will 'run-off'.
In the Basel III standard, the run-off factors applied to maturing repurchase agreements depend upon both the security involved and the counterparty to the repo. Where an ADI has funded a security recognised as HQLA through repo, no run-off in funding is assumed; by their nature, it is envisaged that HQLA can always be resold for cash, regardless of the situation.[1]

In contrast, the standard assumes that repos against non-HQLA securities cannot be rolled during a stress period; that is, the financial institution will lose this source of funding. An exception to this is made in the case of central bank funding; where an ADI has a repo with a central bank maturing in the next 30 days, regardless of whether the securities are HQLA or not, they may assume that there will be no loss (or run-off) in funding.
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http://www.rba.gov.au/mkt-operations/dom-mkt-oper.html
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The bank is St George. I have decided not to roll the term deposit over and to simply move the funds into whichever account they have that has the best interest. Really having savings in a bank is a mugs game now if you have any other way to use that money. Personally I would prefer to remove it, buy extra stock for my business and sell that specific stock at too good to refuse prices and thus make many times the return of the interest rate at the bank.
 
If prices are too good to refuse then that means that there is some change to come. Depending on whether that change arrives before or after, outlooks may be hauled over. A loss of -2 is better than a loss of -3. Despite both being loss.
Expectations! :D
 
petey said:
willrocks said:
Which bank?
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The subliminal advertising works. :lol:
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Yep. I can remember most TV ads from the 1980s. Pitty I can't remember all the math formulae too.

[youtube]http://www.youtube.com/watch?v=oYQaYJxCltY[/youtube]
 
"Which Bank?" you ask. All Australian banks. Why? Because if there is a collapse, a run on term deposits is one less thing to worry about. This is a move to help save the banks. The next step will be the bail in as opposed to bail out. Depositors' money will be converted to shares in order to reduce the run on the bank. This will occur during the bank holiday that may stretch for a couple of weeks. There may may be some ATM funds made available to depositors. This is why we should stack cash, food and fuel. Why, because the banks are stacking contingencies, so should we.

Finally, before you accuse the Banks of duplicity, bear in mind that we are the banks. Everyone with managed super funds has shares in the banks amongst other corporations. It is the competition amongst super companies that drives the banks, Woolies, Coles et al to provide greater profit.

We are "they", the corporations and the government we vote for. The solution? Start a SMSF, and vote for ratbags who'll stick it up the government.
 
sammysilver said:
"Which Bank?" you ask. All Australian banks. Why? Because if there is a collapse, a run on term deposits is one less thing to worry about. This is a move to help save the banks. The next step will be the bail in as opposed to bail out. Depositors' money will be converted to shares in order to reduce the run on the bank. This will occur during the bank holiday that may stretch for a couple of weeks. There may may be some ATM funds made available to depositors. This is why we should stack cash, food and fuel. Why, because the banks are stacking contingencies, so should we.

Finally, before you accuse the Banks of duplicity, bear in mind that we are the banks. Everyone with managed super funds has shares in the banks amongst other corporations. It is the competition amongst super companies that drives the banks, Woolies, Coles et al to provide greater profit.

We are "they", the corporations and the government we vote for. The solution? Start a SMSF, and vote for ratbags who'll stick it up the government.
Click to expand...

Great post.
 
Can anyone tell me why you'd put money into these term deposits when you can get a better rate with instant access

Am I missing something ??
 
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