Singapore: Government Guarantee on Deposits

On October 16, 2008, following the collapse of Lehman Brothers on September 15 and the introduction of Hong Kong’s unlimited deposit guarantee on October 14, Singapore announced its Government Guarantee on Deposits (GGD). The GGD was meant “to avoid an erosion of banks’ deposit base and ensure a level international playing field for banks in Singapore.” It was administered by the Monetary Authority of Singapore (MAS), Singapore’s central bank and financial regulatory body, and was backed by government reserves totaling SGD 150 billion (about USD 100 billion). The program expanded upon Singapore’s pre-crisis guarantee of SGD 20,000, which was administered by the Singapore Deposit Insurance Corporation (SDIC). The GGD insured all Singapore dollar and foreign currency deposits of individual and nonbank customers in banks, finance companies, and merchant banks licensed by the MAS. The guarantee also covered deposits at credit cooperatives, which were not covered by the pre-crisis guarantee. At the time of its announcement, the GGD insured SGD 700 billion in customer deposits. The GGD also covered deposits held by companies and other nonbank entities that the pre-crisis guarantee did not cover. The program ended as scheduled on December 31, 2010. Ultimately, no claims were made on the GGD. In 2011, Singapore expanded its pre-crisis deposit insurance program to cover up to SGD 50,000 in deposits and to include additional types of depository institutions and depositors that the GGD had covered.