Joint Submission from the RBA and APRA to the Inquiry into Bank Funding Guarantees Appendix 1

Senate Economics References Committee

Debt Guarantee Pricing Arrangements



Fee structures with no risk differential		 bps per annum

AA− or better A− to A+ Less than A−
Date of amendment <1 year >1 year <1 year >1 year <1 year >1 year
Ireland - EUR1 billion over nine participants -
Korea(a) 100 100 100 100 100 100
US(b)(c) Current (issuance after 30 June 2009 or maturing after 30 June 2012) 17-Mar-09 75–100 125 75–100 125 75–100 125
US(d)(e) - Current (issuance before 30 June 2009 and maturing before 30 June 2012) 17-Mar-09 50–75 110 50–75 110 50–75 110
US(d)(f) - 1st change 21-Nov-08 50–75 100 50–75 100 50–75 100
US - original -- 75 75 75 75 75 75
Credit rating-based fees
Australia -- 70 70 100 100 150 150
Canada(g) – current 12-Nov-08 110 110 110 110 135 135
Canada(g) – original -- 160 160 160 160 185 185
New Zealand(h) – current 27-Jan-09 70 90 130 150 180 200
New Zealand – original -- 85 140 145 200 195 250
Market-based fees(i)
Denmark(j) 95 95 95 95 95 95
Finland(k) -- 50 n/a 50 n/a 50 n/a
France(l) 59 59 n/a n/a n/a n/a
Germany(m) -- 50 n/a 50 106.9 50 108.8
Netherlands(n)(o) -- 50 73–88 50 93 50 113
Spain(p) -- 50 86.5 50 94.8 50 104.8
Sweden(n)(p) -- 50 74–87 50 95 50 95
UK(q)(r) – current 15-Dec-08 99–109 99–109 95–125 95–125 n/a n/a
UK(q)(s) - original -- 109–124 109–124 112–162 112–162 n/a n/a
Average 75.7 93.3 85.9 107.5 94.5 117.2

(a) Additional fee may be charged as determined by the administrator.
(b) 31- 180 days = 75 bps; 181 – 364 days = 100 bps
(c) Add an additional 25 basis points for non-insured depository institutions
(d) 31- 180 days = 50 bps; 181 – 364 days = 75 bps
(e) Add an additional 10 basis points for non-insured depository institutions issuance < 1year, and 20 basis points for non-insured depository institutions issuance> 1 year
(f) Add an additional 10 basis points for non-insured depository institutions issuance
(g) Excludes 20 basis point fee for foreign currency issuance
(h) NZD fee. Subtract 20 basis points for foreign currency fee
(i) Based on CDS where avaliable. Otherwise usually resorts to credit ratings to determine the fee.
(j) Where CDS spreads avaliable, mean 5-year CDS between 1 Jan 2007 & 31 Aug 2008. Otherwise, use CDS spreads of comparable rating category + 50 bps. Otherwise, 95 basis points.
(k) WLT debt: Where CDS spreads avaliable (or CDS of comparable rating category), mean 5-year CDS between 1 Jan 2007 & 31 Aug 2008. Otherwise, use total fee for lowest rating.
(l) SFEF Issuance spread to swap + Median 5Y CDS Spread 1 Jan 2007 to 31 Aug 2008 + 20bps
(m) LT debt: Where CDS spreads avaliable, mean 5-year CDS between 1 Jan 2007 & 31 Aug 2008 + 50 bps + 10 bps.
(n) Lower end of range refers to AAA−rated banks. Higher end refers to AA−rated banks
(o) Where CDS spreads avaliable, ‘based on historical credit default swap spreads’ + 50 bps. Otherwise, ratings based fee used (which is also the max fee applied to each rating category). (p) Where CDS spreads available, mean 5-year CDS between 1 Jan 2007 & 31 Aug 2008 + 50 bps. Otherwise, ratings based fee used (which is also the max fee applied to each rating category).
(q) RBA estimate based on CDS premiums. Range refers to highest and lowest fees for banks within AA or A credit band. Excludes 3 per cent foreign currency fee.
(r) Mean 5-year CDS between 2 Jul 2007 & 1 Jul 2008 + 50 bps.
(s) Mean 5-year CDS between 8 Oct 2007 & 7 Oct 2008 + 50 bps.
Note: the additional US fee for non-insured affiliates applies where the issuing entity is an affiliate of an insured entity, and the insured institution's assets are less than 50 per cent of the group's consolidated assets.

Sources: BIS; Bloomberg; Treasury departments, central banks, debt management offices and guarantee administrators