changes in PIDM’s deposit guarantee

On 23 Oct 08, Malaysia Deposit Insurance Corporation (PIDM) has temporarily (said to be until December 2010) changes its depositor protection measures to preserve confidence in Malaysia’s financial systems.

Factsheet

List of financial institutions guaranteed under govt deposit guarantee:
(list of Commercial Banks, Islamic Banks, Investment Banks, International Islamic Bank, Deposit-taking Development Financial Institutions):
list

FAQ

Beware of bankruptcy – bank (2)

Prevention is better than cure.
Instead of relying on getting Deposit Insurance after bank went bankruptcy,
it will be better if we can detect when certain banks are going "bad".

Found this "Examiner’s guide to Problem Bank identification, rehabilitation and resolution" from
Comptroller of the Currency Administrator of National Banks, US:
PDF file

The part "Problem Bank Identification" and "Accounting Issues in Problem Banks" are particular useful.

Some of the red flags mentioned (the "guide" teaches on details of these red flags):
1.rapid growth/aggressive growth strategies
2. deterioration in economy
3. management/oversight deficiencies
4. inappropriate limits on OCC access to bank staff and documents (applies to US, in simple term, not letting enough "regulator"’s access to bank staff and documents)
5.risk management deficiencies
6.significant off-balance-sheet exposure
7. asset quality deterioration
8.significant ALLL (Allowance for Loan and Lease Losses) and asset valuation adjustment issues
9. strained liquidity
10.insider abuse and fraud

Beware of bankruptcy - bank (1)

What if banks, where we put our money inside, bankrupt ?

Money we deposit in banks are guaranteed to certain extent by Deposit Insurance.
See below for details of Deposit Insurance for Malaysia, Singapore and US.

Note which are the institutions under cover, type of deposit products covered and amount of the coverage..

PIDM (Perbadanan Insurans Deposit Malaysia)

PIDM handbook and other resources for download
read the handbook:
total coverage is 60k per depositor per member institution;
one good thing is joint accounts held with different people enjoy separate coverage limits, wow !

Examples of calculations
Quiz have some fun:-)

SDIC (Singapore Deposit Insurance Corporation)
SIDC website
coverage is 20k, aggregated (including joint account’s share) and net of liabilities.

FDIC (Federal Deposit Insurance Corporation)
FDIC website
Wow, basic insurance amount is 100k per depositor, per insured bank.. Generous :-)

IADI (International Association of Deposit Insurers)
IADI website
We can find list of countries with a deposit insurance system

Beware of bankruptcy

Seeing Lehman Brothers filing for Chapter 11 protection,
it gives a chill..

One of the worst nightmares of investing is "bankruptcy"..
It can affect our financial well-being badly, some examples:

• company invested bankrupt,
• critical supplier/customer of company invested bankrupt,
• bank holding big portion of our savings bankrupt,
• insurance company underwriting our policy bankrupt,
  ….. the list goes on…

For US,
Visual charts about different types of bankruptcy:
Chapter 7
Chapter 11
Chapter 13

http://www.bankrupt.com/
Its "Troubled Company Reporter" (Asia Pacific, US, Europe) is useful..
We can look for potential problematic companies news here..
(though not sure whether the database is complete)

Web BRD (Bankruptcy Research Database)
website
A website to do Bankruptcy Research :-)
(to be continued….)