Questions & Answers about Foreign Bank Branches
Separate arrangements applied for foreign bank branches wishing to access the Guarantee Scheme. Foreign bank branches differ from foreign subsidiaries in that branches are not separate entities incorporated and independently capitalised in Australia - they are part of the foreign bank incorporated overseas.
A full listing of the institutions which were eligible to apply for the Guarantee Scheme, including the identification of each institution’s type, can be found at Schedule 1 of the Scheme Rules.
- How will the Government's guarantees apply to foreign bank branches?
- What were the restrictions applying to foreign bank branches?
1. How will the Government's guarantees apply to foreign bank branches?
APRA-regulated foreign bank branches were eligible to apply for a guarantee in respect of their short-term liabilities with maturities of up to fifteen months. This was be on the basis of the same fee schedule applying to other ADIs.
Closure of the Guarantee Scheme applied to foreign bank branches, and so they were not able to apply for Eligibility Certificates to issue short-term liabilities after 24 March 2010, and were not able to issue any guaranteed liabilities after 31 March 2010.
Foreign Bank Branches have not been entitled to guarantee any further deposits with a maturity beyond 31 December 2009, or any new at call liabilities after 31 March 2010.
2. What were the restrictions applying to foreign bank branches?
Access to these guarantees was subject to the following conditions:
- The amount guaranteed was limited to 110 per cent of the combined average value of short-term wholesale liabilities and deposits held by Australian residents in the 30 days up to and including 24 October 2008.
- Branches cannot use guaranteed liabilities to directly support the parent bank or group (of which they are part) outside Australia.
- The guarantee was only available if the liabilities are not guaranteed by the home authorities and the branch provided additional information about the parent bank’s prudential compliance.
These requirements ensure the funding is used for Australian operations only and that Australian taxpayers’ funds are protected.