Banks sit on record holdings as wary consumers save

By Scott Murdoch, From: The Australian,, 31 July 2010

THE war for deposits has prompted Australians to save more than ever, driving the money on call at banks to record levels.

Australian households have lodged $461.8 billion with banks in June, up 8.4 per cent on the same time last year. It's a trend underscoring the risk aversion that still exists among investors.

The major banks are the biggest beneficiaries of consumers' flight to cash.

June data published yesterday by the Australian Prudential Regulatory Authority shows there is $1.266 trillion in deposits at all of the banks in Australia. The amount is almost the size of the Australian economy, and a 3 per cent increase compared with June last year.

Most of the savings come from households, but the banks also store cash from corporations, rival banks, governments and certificates of deposits.

Analysis by The Weekend Australian of the APRA data shows the major Australian banks have attracted a growing number of customers, mainly driven by the higher savings rates on offer.

Volatility in global sharemarkets has also encouraged a move to the safety of the major financial institutions.

Analysis of global data by The Weekend Australian shows that about $216bn worth of Australian investors' assets is currently held as cash.