Asia's richest economies shield savers from financial crisis

HONG KONG - Asia's richest countries have responded to the global financial crisis by guaranteeing savers' deposits, but many in the region still have little or no protection in the event of a banking collapse.

In an indication of just how nervous some Asian savers are, recent rumours about the health of two banks in Hong Kong and India sent hundreds of depositors scrambling to withdraw their life savings.

Anxious to prevent a similar run on the banks, Australia on Sunday said it would guarantee all savings, as the global financial crisis entered what Prime Minister Kevin Rudd described as "a new and dangerous phase."

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The move, amid similar decisions by several European countries, aimed to "make sure that our depositors have a guarantee from government given the uncertainty which they are seeing on their television screens each night."

New Zealand matched the measure, announcing a guarantee for retail bank deposits for a period of two years.

In Hong Kong, where a rumour caused a run on the Bank of East Asia late last month, shortly after the collapse of US banking giant Lehman Brothers, the government agreed Tuesday to guarantee all deposits.

Previously, only the first 100,000 Hong Kong dollars (12,800 US dollars) of deposits were guaranteed if a bank went bust.

Last month, hundreds of BEA savers, many of them elderly, had to be held back by police as they fought to get their cash, acting on a rumour that the bank was overexposed to assets linked to Lehman Brothers.

Pressure groups representing nervous savers had for weeks been calling for increased protection.

"In the midst of the current financial tsunami, the protection amount should be raised to boost the public's confidence," Thomas Pang, chairman of the Middle Class Alliance, told the Standard newspaper at the time.

In Asia's largest economy, Japan, the government said it was also considering a blanket guarantee for all bank deposits, bolstering a scheme already protecting savings of up to 10 million yen (100,000 dollars).

Such a move would not be without precedent: the upper limit was temporarily removed between 1996 and 2005, when Japan suffered its own financial crisis.

In Singapore, accounts are covered for losses up to 20,000 dollars (13,200 US), and The Monetary Authority of Singapore, the de facto central bank, has said it does not deem any further measures to be necessary at the moment.

Savers at a branch of POSB, a local bank that is part of Southeast Asia's largest lender DBS Group, seemed satisfied with the current guarantees.

"I feel safe here," said Mahmod, 43, a worker in the high-tech sector. "Because of the law, and the regulations here are very good."

Taiwan earlier this month promised to protect savers' money, while in South Korea, banks are obliged by law to insure deposits for up to 50 million won (around 40,000 dollars) in case of bankruptcy.