Silicon Valley Bank collapse unlikely to impact Tasmanians

Australian banking customers can be assured that their funds are safe in the wake of the collapse of the Silicon Vally Bank (SVB) in the United States.

Speaking on ABC radio, Bank of us CEO, Paul Ranson said, “The Australian regulatory system is very different to the US. We have a world class regulatory system, high levels of capital and a conservative approach to regulation”.

“Silicon Valley Bank was running a high risk banking model.”

APRA (Australian Prudential Regulatory Authority) supervises all entities in the Australian banking sector and they are subject to a strict regulatory regime.

It is almost impossible that an Australian deposit-taking institution could suffer the mismatch of assets and liabilities that led to the collapse of SVB.

Regulatory incentives are put in place by APRA to encourage the matching of assets and liabilities across balance sheets.

Smaller banks and customer owned banks like Bank of us are required to maintain the same capital adequacy as the big four banks.

As an authorised deposit taking institution (ADI), deposits with Bank of us are covered by the Australian Government’s Financial Claims Scheme (FCS).

The Financial Claims Scheme (FCS) is an Australian Government scheme that provides protection and quick access to deposits in banks, building societies and credit unions in the unlikely event that one of these financial institutions fails.

Under the FCS, certain deposits are protected up to a limit of $250,000 for each account holder at any bank, building society, credit union or other ADI that is authorised by APRA. In an FCS scenario, APRA would aim to pay the majority of customers their protected deposits under the Scheme within seven calendar days.

Listen to the full ABC Radio Hobart interview (interview starts 22:48)

https://www.abc.net.au/hobart/programs/mornings/mornings/102077336