Singapore only back up to S$150 billion using its reserve and
the guarantee have ended in 2010.. so money is safe... So why that
guy now then talk about it?
Cut and paste message from the minister Mr Lim Hng Kiang
Why the
Guarantee is Sufficient and Prudent
7. The deposits of individuals and non-bank customers with
banks, finance companies and merchant banks in Singapore amount to
about S$700 billion. In view of MAS’ stringent regulations
and close supervision of financial institutions in Singapore, their
strong capital and asset positions, and the potential support that
foreign institutions in Singapore can avail themselves of where
necessary under the government guarantees provided by their home
jurisdictions, MAS and the Ministry of Finance have assessed that
the backing of S$150 billion of the Government’s reserves provided
to the guarantee would be more than sufficient.
8. Let me explain. First, the likelihood of a bank
failure as a result of problems in Singapore is small as our
banking system is sound and closely supervised, even though it is
possible that problems elsewhere will affect a bank’s operations in
Singapore.
9. Second, even if a bank were to fail here, it should
still have substantial assets to meet its liabilities to
depositors. Under the law non-bank depositors enjoy priority
in being paid, ahead of other unsecured creditors. This makes
it more likely that the failed institution will have sufficient
assets to pay out to depositors. Hence, for the
guarantee to be called, two things have to happen: a bank has to
fail, and at the same time its assets must be worth so little that
there is not even enough to repay its depositors. Even
then the draw on the guarantee should only be for the shortfall,
which should be a fraction of the deposits
outstanding.
10. Hence we have calculated that the S$150 billion backing
is an amount that will be ample to meet any eventuality except the
most remote. S$150 billion does not in any way reflect an
estimate of the likely draw over the two years of the
guarantee. On the contrary, we expect the actual draw to be
small or if we are fortunate even zero. Instead, the S$150
billion reflects the Government’s confidence in the banking system,
and its intention to give all depositors that same confidence.
