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ISCOVER
Staff Reporter
Australia’s deposit market is set for a shake-up thanks to the planned banking reforms.
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Earlier this week, the Reserve Bank of Australia’s assistant governor Guy Debelle said there will be less incentive for financial institutions to offer short-term debt to other financial institutions of less than 31 days.
“The new banking regulations are a global standard set to make Australia’s financial services industry even more secure. The changes will also bring a major shakeup of the deposit market,” RateCity’s spokesperson Michelle Hutchison said.
“At-call accounts such as online savings accounts – where Australians can access their money immediately – are currently one of the more popular methods for institutions to raise capital.
“The changes will mean financial institutions won’t rely as much on short-term funds such as at-call deposits, so savers will need to prepare for lower savings account rates.”
As part of the Basel III reforms, which are set to be enforced by 2015, financial institutions must adhere to higher capital requirements.
This means authorised deposit-taking institutions (ADIs) must show they have a higher amount of money in the bank than previously needed.
And short-term debt (less than 31 days) won’t be counted towards their total capital requirements.
Ms Hutchison said financial institutions will need to attract longer-term deposits.
In addition, she expects lenders to reintroduce notice accounts, which were popular in the 80s and 90s.
“Notice accounts are similar to other savings accounts as they have variable interest rates but you must give a certain notice period if you want to withdraw money. For instance, if you have a 31-day notice account you must give 31 days’ notice before you can access your savings,” she said.
