But could the same happen here and what would it mean for our money? Here’s a breakdown.
Could a major bank collapse in Australia?
First things first – it’s unlikely.
While a number of smaller neo-banks have not survived in the Australian market – namely Volt and Xinja – the likelihood of one of the major banks falling is not likely.
Xinja was an online-only bank that closed in 2020 after customers started rapidly removing funds. Over $200 million was removed from the bank in the months leading up to its closure.
Volt, also an online-only bank, shut down in June last year and returned all deposits to customers.
At the time of shutting down, Xinja had around $250 million in deposits and Volt had around $100 million in deposits.
All four of the major banks – CBA, ANZ, NAB and Westpac – have reported major profits. Even the Reserve Bank governor has said Australia’s major banks are in a very healthy position.
What would happen if a major bank collapsed?
In 2008, after the Global Financial Crisis (GFC), the Australian government introduced the Financial Claims Scheme. This scheme means there is a government guarantee on bank deposits.
Essentially, if a bank were to collapse, the government would make sure your money was not lost along with it.
However, there are limits to the guarantee. Firstly, the government will only guarantee up to $250,000. So, if you have more than that in a savings account, term deposit or offset account, you might want to move some of it around.
The guarantee will also not help you multiple times if you have accounts with a couple of banks that are actually owned by the same bank. For example, Westpac owns St George Bank. So if you had more than $250,000 with Westpac, and the same with St George, and Westpac collapsed, you would not also be reimbursed for the St George collapse.