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How Safe Is Our Money In Foreign Banks


Yeobt
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On 4/16/2020 at 12:02 PM, Yeobt said:

Hi, my family have some saving with the foreign banks in sgp like Citibank, Standchart and etc. As you know, the current covid19 situation in these foreign countries are pretty serious. In facts, this pandemic is impacted the world economy and many big corporate names could be fallen. I dont know how bad could this pandemic goes around affecting the market becos I'm not an economist. But I knew that oversea banks are not bullet-proof too and they could also be collapsed which indeed it happened in other countries before. Not forgetting that the worst is yet to come. 

Do you think depositors like us with money in foreign banks are protected in Sgp?

Between foreign banks n CPF, i trust the foreign banks alot more. 

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12 hours ago, NightWind said:

Between foreign banks n CPF, i trust the foreign banks alot more. 

Think your trust is misplaced....I doubt any foreign banks credit rating is better than Singapore government.

CPF holds special Singapore government bonds.

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4 minutes ago, TangoCharlie said:

Think your trust is misplaced....I doubt any foreign banks credit rating is better than Singapore government.

CPF holds special Singapore government bonds.

Its not a matter of trust. I can take my deposits from a foreign bank n get a LTV of a least 90% for a loan in same currency from a bank

No bank will give any LTV for CPF funds as u do not have easy direct access to cpf money. And the rules governing access change all the time.

The average singaporean probably has alot of funds tied up in CPF, n the PAP uses this as a financial handcuff to lock the funds in singapore n prevent a flight of assets off shore. It can only be used to buy sg properties, n subject to many restrictions. And u cannot easily access it if u r unemployed today to pay for daily essentials.

If i was allowed to take out my cpf now i would take all of it out now n put it in a AAA rated bank OFFSHORE which i can have access easily.

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On 4/19/2020 at 9:46 AM, Chongster said:

firstly there is no insurers involved, this is bigger than the insurers,  they dont have the ability to underwrite deposits.  this is ultimately underwritten by the govt. if the bank goes under, the SDIC will step in and repay teh deposit.

secondly, you are right, it is up to $75k, and not pro rated. whoever says otherwise ought to be pofma-ed.  and also it is $75k per bank, so spread your money. 

thirdly foreign banks operating in SG are subject to the SDIC insurance schemes.  But not foreign currency.  So only SGD deposits.  because Govt can only print SGD lah. 

fourthly,  do remember that during the Great Financial Crisis, the MAS, along with Fed and many other CBs, moved to guarantee every single dollar of local currency bank deposit.  and that is notwithstanding all the moral hazard.  There is really no other choice, if one bank fail, the SDIC can kick in, if the banking system start to fail, it becomes a political problem.

dont fear and dont spread fear lah

Where do you get the info that it is underwritten by the govt? Seems like it is underwritten by SDIC directly based on their website. Even tho SDIC is govt controlled, there is no commitment to print money to cover SDIC if it becomes insolvent.

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Organisation

Singapore Deposit Insurance Corporation Limited (SDIC) administers the Deposit Insurance (DI) Scheme and Policy Owners' Protection (PPF) Scheme in Singapore. SDIC is a company limited by guarantee under the Companies Act. The board of directors is accountable to the Minister in charge of the Monetary Authority of Singapore (MAS).

The main functions of SDIC under the DI Scheme are to collect premium contributions from DI Scheme members, manage the Deposit Insurance Fund, compensate insured depositors and educate the public on the DI Scheme. In respect of the PPF Scheme, the main functions of SDIC are to collect levies from PPF Scheme members, manage the Policy Owners' Protection Life Fund and the Policy Owners' Protection General Fund, make compensation payments and educate the public on the PPF Scheme.

What happens if the premiums collected over the years is not enough to cover all the losses?

Quote

Conditions for payout

MAS may decide that a deposit insurance payout should be made if:

A court order has been made to wind up a DI Scheme member; or 

MAS has determined that a DI Scheme member is insolvent, unable or likely to become unable to meet its obligations, or about to suspend payments.

Announcement of payout

If a DI Scheme member fails, all depositors entitled to receive compensation from SDIC under the DI Scheme will be notified. Depositors do not need to file claims with SDIC as payouts will be computed based on the records of the failed DI Scheme member.

SDIC will also make official announcements in the Government Gazette, through mass media such as newspapers, television, radio and SDIC’s website. 

SDIC will pay depositors entitled to compensation as soon as possible. Payment may be made by cheques, cashier’s orders or by electronic payment methods.

If the compensation you receive from SDIC is less than your total amount of deposits with the failed DI Scheme member, SDIC will submit a claim on your behalf to the liquidator of the failed DI Scheme member for the difference.

SDIC website makes no promise that the govt will print money to cover them. Even if they make such a promise, you can't believe it because they can't make promises on behalf of the govt, only the govt can give such an undertaking (which they haven't).

Ultimately, if SDIC doesn't have enough money to cover, you will become a creditor of the bank which means you could be shit out of luck.

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1 hour ago, NightWind said:

Its not a matter of trust. I can take my deposits from a foreign bank n get a LTV of a least 90% for a loan in same currency from a bank

No bank will give any LTV for CPF funds as u do not have easy direct access to cpf money. And the rules governing access change all the time.

The average singaporean probably has alot of funds tied up in CPF, n the PAP uses this as a financial handcuff to lock the funds in singapore n prevent a flight of assets off shore. It can only be used to buy sg properties, n subject to many restrictions. And u cannot easily access it if u r unemployed today to pay for daily essentials.

If i was allowed to take out my cpf now i would take all of it out now n put it in a AAA rated bank OFFSHORE which i can have access easily.

I see. It's different thing.

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Citibank and Maybank used to be foreign banks and acted as a branch of the foreign owned banks. They have both since become Singapore incorporated and are deemed as local banks. Hence their daily capital requirements to be placed with MAS are as stringent as the big 3 local banks. I am not sure about Stanchart and HSBC. Whether they have converted to be Singapore incorporated. 

Citi and MBB have to place a large pool of cash placed with MAS, enough to cover most of their consumer customer deposits. so yes, safe to bank with them.    

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