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Different banking businesses under one banking licence

The Financial Claims Scheme (FCS) limit of $250,000 applies to the total amount of an account holder’s deposits with each licensed authorised deposit-taking institution (ADI). This is important, as some ADIs operate multiple banking businesses under the one banking licence, but with different trading names. For example, BankWest is part of the Commonwealth Bank, while St George is part of Westpac. Some banks also offer accounts under the name of a different company, such as a subsidiary of the ADI: for example, deposit accounts offered by RAMS are actually Westpac accounts. Some accounts may also be branded or marketed under the name of a third party, such as Bank of Queensland offering accounts under “Virgin Money Australia” name or National Australia Bank offering accounts under the “Citi” name.

A depositor might think they have accounts with two different ADIs, when both accounts are actually under the same banking licence. This could affect the depositor’s cover under the FCS, as the FCS limit of $250,000 will apply to the total amount held in all of the depositor’s accounts under the one banking licence.

APRA recommends that individuals contact their ADI directly if they have any questions about their level of cover under the FCS.

Case study

Jane has two bank accounts in her own name:

  1. An account with Bank A, which has a balance of $200,000, and
  2. An account with Bank Z which also has a balance of $200,000.

Bank A is licensed by APRA under the name 'Bank A'. Bank A also operates a banking business under its licence, which trades under the name 'Bank Z'. This means that both of Jane’s accounts are actually held under the one banking licence. 

If Bank A fails and the Australian Government activates the FCS, only $250,000 of Jane’s $400,000 total would be covered. This is because the $250,000 FCS limit applies to a banking licence, which in this case covers both Bank A and Bank Z, as they both operate under Bank A’s licence. However, Jane may be able to recover all or part of her remaining $150,000 in the liquidation of Bank A, depending on what assets are available.