Strength of the banking sector in Australia?

Question

I hope those expert can help me to clarify this question. Recent financial crisis that hits australia badly particularly in the banking sectors had seen to be getting worsen. No one actually can predicts what is going to happen in the coming future. Aussie dollars had fallen to its lowest and banking had suffered huge loses due to non performing loans. My questions is based on my scenario that i created. First, If one of the bank in australia is closing down due to major losses incurred, will the govt of aus interfere? second, given an example that if this bank is a private owned banking, will the govt interfere to help the bank? third, if public had saving in this bank say 10000 dollars in its term deposit which is their hard earn money, if the bank closed down, what will happen to those saving, will the govt assist or protect consumer by paying them back... in other countries, govt do protect consumers by giving a certain amount of money back to the consumers once the bank becomes bankrupt. we take an example her, ANZ for instance. Last, how strong do u think banks such as ANZ, NAB and the Commonwealth bank at his moments?

Answer 1

First, If one of the bank in australia is closing down due to major losses incurred, will the govt of aus interfere?

Ans: Yes, the Govt. and the central bank will intervene to protect depositors interest.

second, given an example that if this bank is a private owned banking, will the govt interfere to help the bank?

Yes, such central bank and govt. intervention to protect depositors will come even if the bank is privately owned because the central bank being the regulator of banks cannot shirk its resposibility for bank failures and they have to ensure that one bank failure does not cause successib=ve bank failures due to crisis of confidence.

third, if public had saving in this bank say 10000 dollars in its term deposit which is their hard earn money, if the bank closed down, what will happen to those saving, will the govt assist or protect consumer by paying them back... in other countries, govt do protect consumers by giving a certain amount of money back to the consumers once the bank becomes bankrupt. we take an example her, ANZ for instance.

Yes, small depositors will get their deposit monies back. But central bank / govt. will intervene much before a bank really fails.

Last, how strong do u think banks such as ANZ, NAB and the Commonwealth bank at his moments?

You need not worry as an investor, but as an investor in the shares of these banks you are at higher risk than before.