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What is the Government Guarantee?

The Australian Government has passed legislation to guarantee deposits of eligible authorised deposit-taking institutions (ADI) including Australian banks, building societies, credit unions and Australian subsidiaries of foreign-owned banks.

All deposits up to $1m will be guaranteed free of charge. For total deposits above $1m, the Federal Government will impose a fee of between 0.70% and 1.50% (based on the credit rating of an ADI) on every guaranteed dollar above the $1m threshold from 28 November 2008.

The Australian Government introduced the guarantee to match moves by international governments and keep Australia's financial services system competitive. It was not because it believed an Australian bank was likely to fail.

How long will deposits be guaranteed?

The Australian Government Deposit Guarantee will remain in place for three years from 12 October 2008. The guarantee ceases after that date unless extended by the Government.

Does the governments decision to end the guarantee scheme for large deposits and wholesale funding on 31 March 2010 affect my account?

The announcement does not affect the Financial Claims Scheme (FCS), which continues to cover the deposits of UBank and NAB customers up to $1 million until the cap is reviewed in October 2011.

FAQs about the FCS (PDF, new window) are available from APRA site should you wish to seek further clarification.

Is UBank covered under the guarantee?

Yes. As UBank is a division of National Australia Bank, this guarantee applies to UBank.

Will UBank offer to guarantee funds over $1m?

UBank will not be offering customers the option of paying a fee to guarantee deposits over $1m.

UBank operates under NAB's banking licence, so all UBank customers have the same depositor protection that is provided to NAB customers.

That means your deposits are held in a strong and well performing Australian bank and protected by stringent controls to ensure protection of your funds. In addition, under Australia Prudential Regulatory Authority (APRA) regulations, NAB (and therefore UBank) ensures that it has the money available to cover customer deposits.

Who'll administer the guarantees and the fees?

The Reserve Bank of Australia (RBA) will administer the guarantees as agent for the Commonwealth. The RBA will perform administrative tasks, including processing applications from institutions for coverage of liabilities and collecting fees.

Is NAB safe?

NAB is a very secure, profitable organisation operating under strict regulatory and operational controls to ensure the safety of customer's funds.

I have multiple deposits across NAB and UBank. How does the limit work?

The limit applies per customer per institution. That is, the limit applies to the combined total amount of funds you have with both NAB and UBank.

For example, you may have a transaction account with NAB of $10,000; as well as a $150,000 UBank Term Deposit. That would make your total deposit balance with our institution $160,000. The total amount of $160,000 will be guaranteed under the Government's Financial Claims Scheme.

I want to pay the fee to have my deposits over $1m guaranteed. What can I do?

NAB is offering customers Government Deposit Guarantee options for business and personal customers. For further information about NAB's Government Guaranteed products please visit your local branch or contact your business banker.

When deciding whether or not to opt for the guarantee on deposits over $1m customers should make a risk/return assessment, as you would with any other investment, and carefully consider whether you believe the level of risk warrants paying 70 bpts in lower returns to access a government guarantee.

I had a look at the list of approved Authorised Deposit Taking Institutions (ADI) and did not see UBank listed. Why is this?

UBank is a division of National Australia Bank and operates under NAB's banking license (AFSL 230686).

NAB is an authorised deposit-taking institution (ADIs) incorporated in Australia and therefore is covered by the Government guarantee. And UBank is automatically covered under NAB's license.

Frequently Asked Questions