Australia's financial regulators and government, and the financial institutions themselves, continue to wrangle over the details, limits and implications of Australia's system of deposit insurance, also announced in haste two weekends ago.
The Australian newspaper today reported several scenarios on the fees that may apply under the scheme - or schemes, given there may be one fee for insured deposits of in excess of $1 million and a second fee for guaranteeing offshore term funding.
Treasury has in mind a sliding scale for the fees, according to
one report by Scott Murdoch, and which appears to relate to offshore term funding.
The proposed fee for AA rated banks would be 20 basis points for one year funding, 35 bps for three year funding and 50 bps for five year funding. BBB rated banks would pay double these fees.
Murdoch's article does not make clear what fee might apply to retail deposits.
The Australian
separately published a letter from Glenn Stevens, governor of the Reserve Bank of Australia, to Ken Henry, secretary to the Treasury and dated last Friday, which provides a glimpse into the debate between regulators.
In this letter Stevens proposed fees for AA rated banks of 70 bps; for A rated banks of 100 bps and for BBB rated banks, 150 bps. Stevens suggested this fee apply to all maturities.
He argued this was a little cheaper than the pricing under the similar scheme in Britain but twice the level under the US scheme.
Stevens also noted that "an alternative which has certain attractions would be to adopt the UK model of CDS spread plus 50 bps. The figures I have seen say that would end up over 200 bps in general for all our banks."
In his letter Stevens also made the point that that "The problem we face is that the sudden (and substantially irrational) surge in demand for guaranteed instruments is creating - or is about to create - serious dislocation in the financial system.
"People with up to $5 million will be looking to shift out of securities, [cash management trusts] etc into deposits. And entities with more than $5 million will be looking do the same."
These shifts are underway, with outflows from some cash management trusts and mortgage funds, and also from foreign bank branches to banks covered the guarantee.
Stevens does not elaborate in the letter on how serious these "serious dislocations" may be.
Also missing from the debate over the last week is the genesis of the guarantee in the first place, namely the emerging run on a couple of regional banks and one foreign bank in early October given a flight to quality among depositors.
In a third article by David Uren and others, The Australian reported that at the time of the correspondence from the RBA the Treasury was looking at a fee of as low as 10 basis points.
What the increasingly rowdy debate in Australia does not yet clarify is whether a separate set of fees may apply to regular bank deposits of in excess of $1 million (which appears to be the agreed cap so far).