Singapore guarantees $102B of deposits

SINGAPORE (AP) -- Singapore said Thursday it will guarantee 150 billion Singapore dollars (US$102 billion) of bank deposits for more than two years after regional finance rival Hong Kong moved to protect its deposits earlier this week.
The government committed S$150 billion of its reserves to guarantee all local and foreign currency deposits of individual and nonbank customers of banks, financial companies and merchant banks until December 31, 2010, the Finance Ministry and central bank said in a joint statement.
"The announcement by a few jurisdictions in the region of government guarantees for bank deposits has set off a dynamic that puts pressure on other jurisdictions," the statement said. "This is why although Singapore's banking system continues to be sound, the government has decided to take precautionary action to avoid an erosion of banks' deposit base."
The Hong Kong Monetary Authority said Tuesday it will use exchange fund reserves to guarantee bank deposits until 2010, regardless of the amount.
Singapore had not taken any exceptional measures since turmoil in world financial markets worsened over the last few months. Weakening demand for the city-state's exports led to a 0.5 percent contraction of the economy in the third quarter.