Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697646063848.pdf (Australia)
Senate Standing Committees on Economics PO Box 6100 Parliament House Canberra ACT 2600 Submission: “Banking Amendment (Deposits) Bill 2020” I am an Australian citizen in my late 50’s.

My partner, who is in his mid-seventies, and I have owned a business for many years.

We have built up a modest self- managed superannuation fund of mostly cash deposits, upon which we are already relying to support ourselves as the business is winding down towards retirements and currently affected by COVID 19.
We are worried about financially surviving if Bail-in took place, as the opportunity to replace our savings through business or work elsewhere is rapidly closing, particularly in light of the current COVID-affected economic conditions.

There appears to be much confusion concerning the potential for Bail-in in Australia.

I believe it is essential that the ‘Banking Amendment (Deposits) Bill 2020’ be passed to remove this confusion.
The Treasury assured parliament that Bail-in of ordinary deposits could not take place in Australia just prior to the passing of the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 in February 2018 but now many members of parliament are doubtful about this.
Certainly it appears that the advice by Treasury was only partially correct and the “Banking Amendment (Deposits) Bill 2020” is necessary to bring the law into line with the belief held by parliament at the time the ‘Crisis’ bill was passed.

My concern that Bail-in can be executed in Australia is based on the following: 1.
Bail-in has already been used in Australia: According to a statement in a thesis by Chris Berg 2016 entitled Safety and soundness: an economic history of prudential bank regulation in Australia, 1893-2008 Bail-in occurred in 1892.
He stated “Of the $65 million of deposits held in banks which ultimately reopened, $9 million was converted into preference shares or interminable deposits, $42 million had been repaid by 1901, but the last repayment to depositors was made as late as 1918 (Royal Commission into Monetary and Banking Systems 1937)”.

This Bail-in is confirmed in a study by Fitz-Gibbon and Gizycki (2001) Reserve Bank of Australia 3rd paragraph page 23.

2.
2.

Australia’s commitment to Bail-in: Australia, along with all other G20 members, made firm commitments to a Bail-in system and most countries throughout the world now have Bail-in.

This includes New Zealand where the law is very specific and clear.

3.

Laws already in Place for Bail-in 2011: Many of the laws necessary for Bail- in were already in place in 2011 according to an Executive Summary G20 Survey on Bank Bail-in’s and NVCC.

Banking Amendment (Deposits) Bill 2020Submission 112 4.
Legislation is in train 2013: In an FSB paper April 15, 2013 “Implementing the FSB Key Attributes of Effective Resolution Regimes – how far have we come?” it is stated that Bail-in legislation is in train in Australia.

5.
5.

Senator Amanda Stoker Statement: Senator Stoker, a barrister who has been a prosecutor as well as a judge’s associate in both the Queensland Supreme Court and High Court of Australia explained the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 to a constituent in a 5 November 2018 letter: “The legislation facilitates bail-in as a type of resolution power which is available for dealing with financial institution distress.
This was done after the G20 leaders endorsed a new Financial Stability Board standard for Total Loss-absorbing Capacity.

Specifically, it builds on the Key Attributes which specifies that Financial Stability Board jurisdictions should have in place legally enforceable mechanisms to implement a bail-in.

The purpose of the Total Loss-absorbing Capacity standard ensures there are mechanisms in place to stop the ‘domino effect’ and reduce loss on [sic] bank shareholders, creditors and the Government.” 6.
Bank Terms and Conditions: Westpac, NAB, ANZ and CBA have Terms applicable to deposits with all having a clause stating that the Terms can be changed at any time with minimum notice and thus APRA could introduce a Bail-in clause to these terms at any time.
The CBA Terms and conditions at Clause 17(B), for example, state the following: “17B Changes to your account terms and conditions: ------(k) Adopt or implement any legal requirement, decision, recommendation, regulatory guidance or standard of any court, tribunal, ombudsman service or regulator” Under the 2018 ‘Crisis’ legislation, APRA can decide secretly whether to protect depositors or promote financial stability but in a 2012 Reserve Bank of Australia paper it is stated that the “priority of regulators, mandated under Commonwealth legislation is to pursue financial stability” and thus Bail-in is the most likely outcome.
The most frequent response to my ‘Bail-in’ concerns by my political representatives includes an assurance that there is no problem in any case since all deposits are protected by the ‘Financial Claims Scheme (FCS).

However, again this demonstrates that many representatives have been ill advised by their senior party Member’s since:  The FCS applies only to failed banks whereas ‘Bail-in’ will be executed to re- capitalise a bank to delay or prevent a bank failure and thus is not covered by the FCS.
 At this point, the FCS has not been activated by the Government or APRA and thus there is no guarantee in place.

Banking Amendment (Deposits) Bill 2020Submission 112  Even if activated, the guarantee has a ceiling of $250,000 per deposit and this will protect only very small businesses  The FCS has a limit of only $20 billion per bank while each of the big banks have deposits of ten times this value.

Thus the guarantee will pay out less than 10 cents in the dollar.
Bail-in should not be an option for the Banks without approval from the depositors.

I would hope that a Bail-in by the government would produce a more acceptable solution.

Yours Faithfully Banking Amendment (Deposits) Bill 2020Submission 112