Feb. 7 (Bloomberg) -- Australia is withdrawing its guarantee for large deposits and wholesale funding
in a sign the nation’s banks are recovering from the global financial crisis.
The program will be withdrawn on March 31 on the advice of the Council of Financial Regulators, Treasurer Wayne Swan said in an e-mailed press release. A plan that gives certainty over deposits of up to A$1 million ($864,000) won’t be affected
, Swan said.
“This is a definite milestone on the road to recovery from the global financial crisis,” said Tim Schroeders, who helps manage $1.1 billion at Pengana Capital Ltd. in Melbourne. “It’s an indication the worst is over and that banks don’t need a government guarantee to legitimize them as deposit-taking entities.”
The bank guarantees were introduced in October 2008 following the collapse of Lehman Brothers Holdings Inc., which roiled financial markets worldwide and helped precipitate a global recession. The guarantees enabled Australian banks to raise funds on international markets, helping lenders avoid the sorts of bankruptcies that hampered the U.S. financial system.