Tuesday, October 28, 2008
Bank of East Aisa facing problems
Remember not too long ago that I recommended this bank's fixed deposit. Its really high, at 2.125% for 6months. Link at : http://ntuchartist.blogspot.com/2008/10/fixed-deposit-deals-as-of-18th-oct-2008.html
The brief picture:
Apparently the bank is facing problems, because their earnings was inflated by one of its traders and other losses due to their collateralize debt obligations. Though some people have been taking out their deposits from the bank as they worry about the stability of the bank, the bank states that they are are still in a strong position.
Last year, this bank is Hong Kong's fifth largest bank by assets reported a net profit of HK$4.14 billion.
What I feel:
I am not sure whether the fixed deposit promotion is still on or not, but if you have put your money there already, I have confidence that our MAS has the ability to guaranteed your deposits. So that should be the least of your worries.
The only problem is that if BEA(Bank of East Asia) really falls, it will take time for you to get your money back. As the Deposit Insurance Scheme will only apply, after the bank that falls has sold all its assets and is still unable to compensate you. ( This will definitely take lots of time!)
In other words, your money will be stuck there for a while.