5 Aug 2013

Bank stocks hit by levy move

7:28 am on 5 August 2013

Australian bank stocks took a hit after the federal government announced it is considering a new levy to fund deposit insurance.

Australian banks survived the global financial crisis better than those in just about every other developed economy.

When Lehman collapsed, the federal government stepped in with a scheme to underwrite wholesale funding and deposits of up to $A1 million.

The funding guarantee has now lapsed and the deposit guarantee has been scaled back to a maximum of $A250,000.

Radio New Zealand's Sydney correspondent reports the government is now mulling a levy of between 5 and 10 points to seed a deposit protection fund in the event of another crisis.

The move is in line with recommendations from the IMF and is in line with international best practice on deposit insurance. And with Aussie banks raking in profits of $A70 million per day, they can afford it.