Banks battle to keep hands on deposits

Banks may bring out a range of “guaranteed” savings accounts in an effort to keep hold of consumer savings.

According to the Herald Sun, the government’s plans to secure all individual deposits up to the value of $1 million mean that many Australians with more money than this will look to spread their cash about to make sure they are protected.

Because of this, banks are now worried that when the scheme comes into effect at the end of this month, they will see millions of dollars removed from savings accounts and placed among other institutions.

Such a scenario would be particularly dire for banks because they are more dependent on deposits now that international lending has dried up.

To avoid this dash to withdraw cash from savings accounts, Commonwealth Bank spokesman Bryan Fitzgerald said that it is mulling over the introduction of new guarantee-style savings accounts which offer Australia’s millionaires full protection, no matter how much they’ve got stashed away.

The government guarantee scheme forms part of the raft of measures introduced last month to try and stabilise the economy.ADNFCR-1761-ID-18873056-ADNFCR