Is money in the bank guaranteed in SA?

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Chicken Boo

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I remember during the 2008 financial meltdown, many EU countries and the UK increased their guarantees to 100% (i.e. if you put 100 bucks in the bank you're guaranteed to get 100 back) because of rising fears of bank-runs. What guarantee do SA banks offer on money in a savings account? or rather, what does the reserve bank guarantee?
 
No guarantees on SA deposits afaik. Its pretty much implied though...we've only got 4 big banks and a run on even 1 would fck the economy so the gov would have to step in anyway.
 
i heard somewhere that SA banks are requred to keep x amount of thier deposits fluid or something, just to prevent a run on the bank. Now i dont know exacly what i heard but i think its something like this.
 
South African banks are amongst the most prudent banks in the world. Our law requires to keep an liquidity ratio ( can't rembember) higher than most banks across the world.

Basically i doubt our banks can go bust.
 
gboy said:
i heard somewhere that SA banks are requred to keep x amount of thier deposits fluid or something, just to prevent a run on the bank. Now i dont know exacly what i heard but i think its something like this.
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Yeah like 10% or something.
 
No guarantee.

There are certain prudential requirements e.g. banks must have at least 10% of loan book in own capital - now enhanced by the Basel II accord worldwide between all banks in terms of how loans are risk assessed and the impact thereof on the capital requirement. And there are liquidity requirements re. what % of book must be held in liquid assets etc.

No bank is to large to fail, but as a previous poster pointed out, we'd all be fooked if one of the big banks fail - and the government won't allow that kind of systemic shock to the system.
 
Some of our banks have gone bust due to bank runs in the past, which nearly spread to others forcing the government to step in..
 
The SARB guarantees to lend SA Big 4 banks unlimited funds at the repo rate as required. This effectively implies that funds are guaranteed in bank accounts. As the SARB regulates the banks, and the banks have to report to them in detail every month, our banking system is fairly solid. Regulations also ensure that banks hold a high percentage of capital, and liquidity to avoid meltdowns such as the ones in the US where the investment banks held very little liquidity. This is also monitored on a regular basis.
 
gboy said:
i heard somewhere that SA banks are requred to keep x amount of thier deposits fluid or something, just to prevent a run on the bank. Now i dont know exacly what i heard but i think its something like this.
Click to expand...

How does that help in the case of an actual run on the bank? Surely if people panic, 10% would not be enough?
 
blunomore said:
How does that help in the case of an actual run on the bank? Surely if people panic, 10% would not be enough?
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That's where SARB, as lender of last resort, will step in and assist to keep the bank from failing. You're right, 10% wouldn't necessarily stop a run on the bank - although a large percentage of deposits are either fixed or by more knowledgeable corporates.
 
Good to hear that SARB can provide funds to the banks in case it's required......but none of that really applies to me LOL....money is out quicker than it went in.
 
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blunomore said:
How does that help in the case of an actual run on the bank? Surely if people panic, 10% would not be enough?
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The 10% thing isn't meant to make the bank survive a bank run. Its meant to prevent a run from starting. i.e. Prevent banks from trying to run their business with R5.45 in actual cash & the rest is just digital numbers & IOUs. Someone then decides to draw R6 he doesn't get it, panics & tells his friends & Bank run.
 
Wasn't there a bank that went under a few years ago and people had issues getting their money?
 
HavocXphere said:
The 10% thing isn't meant to make the bank survive a bank run. Its meant to prevent a run from starting. i.e. Prevent banks from trying to run their business with R5.45 in actual cash & the rest is just digital numbers & IOUs. Someone then decides to draw R6 he doesn't get it, panics & tells his friends & Bank run.
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very good point

xrapidx said:
Wasn't there a bank that went under a few years ago and people had issues getting their money?
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BOE and Saambou had runs, the former being bought by Nedbank and the latter allowed to fail by the Reserve Bank. It ended in the collapse of the A2 banking tier.
 
blunomore said:
What was the reason for that bank folding and did people never get all their money back .... did they at least get some part of it?
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Can't remember - just remember seeing it on the news - I think they only got some of their money back... the usual thing happened, people heard the bank was in trouble and queued at atm's to get their cash out.
 
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