Tuesday 28 April 2015 by Justin McCarthy Company updates

An important change to Rabobank deposits

Late last year, Rabobank announced that the Dutch parent (Rabobank Netherland) will no longer guarantee new deposits of the Australian subsidiary (Rabobank Australia Limited, including RaboDirect) effective from 1 May 2015. However, existing deposits will continue to receive the guarantee until those funds are withdrawn or changed to another customer account name.

Whilst this does remove an added protection, we remain comfortable with the strength and standing of the Australian operation on a standalone basis and its continued regulation by APRA.

Further, deposits up to $250,000 in Rabobank Australia Limited (including RaboDirect) will continue to be eligible for the Australian Government deposit guarantee.

The following is an extract of Rabobank’s notification:

Since 1994, our parent company Rabobank Nederland has provided a guarantee on funds deposited with the Bank. This guarantee was put in place to help establish and grow our business in Australia. Since then, the Bank has grown to become one of Australia's largest lenders to the food and agribusiness sector and, through RaboDirect, a significant online savings bank. Our size and strength means we have outgrown the need for a parent guarantee and Rabobank Nederland has therefore decided to allow the guarantee to end at the close of 30 April 2015. We believe this is a positive development for us and a sign of confidence from our parent.

We remain an Australian registered bank, supervised by the Australian Prudential Regulation Authority (APRA) and operating within Australian banking regulations. Rabobank Australia remains a strategically important part of Rabobank's international business, which is focussed on retail deposits and lending to the food and agribusiness sector.

What does this mean for your clients' deposits?

All of your clients' deposits or credit balances with Rabobank Australia Limited, including RaboDirect, when the guarantee ends will continue to be guaranteed by our parent for as long as they remain with us in the same customer name. In other words, your clients' funds held with us before the guarantee ends will only lose the benefit of the guarantee if they are withdrawn from us or transferred to an account with us in a different customer name. All interest your clients have earned up to when the guarantee ends is guaranteed. In addition, for term deposits opened before the guarantee ends, all interest due will also be guaranteed until it is withdrawn from us or paid or transferred to an account not in the same customer name.

Any new client deposits made after the guarantee ends (whether into an existing account or any new account your clients open) and new interest earned after the guarantee ends, will not be covered by the parent guarantee.

After the guarantee ends, your clients' account may contain a mixture of ‘old’ guaranteed deposits and ‘new’ unguaranteed deposits. All withdrawals you make from your account will reduce the ‘old’ guaranteed deposits first.

In considering this change, your clients should keep in mind the following:

  • Your clients' deposits continue to be covered by the Australian Government Guarantee up to $250,000, within the scope of that scheme.
  • The Rabobank Group is in the Top 5 Safest Commercial Banks in the world according to Global Finance magazine and has a Tier 1 capital ratio of 14.9% at June 2014, which is significantly higher than international regulatory minimum levels.
  • Rabobank Australia Limited exceeds the current minimum regulatory capital requirements set by APRA, with a total capital ratio at June 2014 of 12.05%.

With our strong track record of growth in Australia, your clients will continue to take advantage of our competitive deposit products - and our commitment to you remains the same.

For further information, including the latest deposit rates, please contact the Short Term Money Market team on 1300 337 674 or email td@fiig.com.au.

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