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The federal government has quashed rumours that it is set to overhaul its $110 billion bank funding guarantee.
The guarantee has come under attack in recent months as its existing price structure is believed to punish the smaller banks.
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Federal treasurer Wayne Swan said the government would continue to monitor the program but ruled out making any substantial changes after announcing an extra $8 billion investment in mortgage securities.
Under the guarantee, smaller lenders with lower credit ratings are forced to pay higher costs than the big four banks.
Banks with a AA credit rating pay an annual fee of 0.7 per cent for the government guarantee, while those with an A rating pay 1 per cent and those with a BBB rating pay 1.5 per cent.
Bank of Queensland chief executive David Liddy said yesterday that the guarantee had cost the regional bank upwards of $10 million.
“It has been a competitive disadvantage to us in terms of access to the tune of about $10 million impact on our bottom line this year as a result of paying 80 basis points more than a major pays,” Mr Liddy told an investment conference in Sydney.
