Tuesday, September 10, 2013

US: Depositors in Foreign US Bank branches will have No Deposit Insurance

Starting today, following a 5-0 vote by the FDIC (Federal Deposit Insurance Corporation) , depositors in foreign US bank branches will officially no longer have recourse to a $250,000 in deposit insurance. The notional amount of deposits at risk: $1 trillion. This is not a new development: the FDIC rule to curb insurance on this category of deposits was proposed earlier this year, and today was the formalization.

I think Citibank is the only major US bank with branches in Sri Lanka.

The FDIC's action was prompted by the move last year by U.K. regulators to propose changes in the way deposits held at overseas branches should be treated. FDIC officials said.

If the UK proposals are implemented then HSBC deposits in Sri Lanka will no longer be insured.

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