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Several weeks ago I received an email from banking giant Citigroup, entitled "Change to Inter-Institution Transfers User Agreement."
Purportedly as a "security measure," Citigroup has significantly reduced its daily and monthly limits on outgoing wire transfers. The daily limit is now US$2,000 and the monthly limit is US$10,000.
Citigroup is by far America's largest bank, with assets exceeding US$2 trillion. It's also one of the most troubled. You might recall that a few weeks ago, the Abu Dhabi Investment Authority provided Citigroup with US$7.5 billion to shore up its balance sheet in the wake of last summer's sub-prime fiasco.
Some experts believe that when the smoke clears, Citigroup will need at least another US$10 billion to bring its capital up to minimum levels. That's due to its decision to take US$49 billion worth of off-balance-sheet investments in structured investment vehicles back onto its own balance sheet. Not to mention its promise to guarantee another US$58 in so-called "special investment vehicles" it manages. And don't forget the US$17.4 billion Citigroup already took in losses and asset write-offs in the last few months.
Even healthy banks have imposed withdrawal limits. My own bank, for instance, recently slapped a US$10,000 daily limit for outgoing wire transfers, or US$50,000/month. That's a substantial improvement from Citibank's limits, but still sobering when you consider that until 2007 (according to banking insider James Sinclair), no major U.S. bank limited outgoing electronic transfers.
If you're a U.S. depositor in Citibank, and have a checking account there, you can write as large a check as you wish to move your money to a stronger institution. But many foreign investors who have U.S. bank accounts don't have access to paper checks. If they want to transfer money out of Citibank, or any other bank that has imposed such limits, they must do so electronically.
Or, they can close their accounts altogether—an option that I suspect will be resorted to much more frequently as 2008 progresses.
yeah alot of major banks have already had limits as such, for years. My bank will never do that as it is tough to open an account for one. The increase in bank fraud is definitely to blame. I am sure with this measure, it will do a little help in raising the us dollar value again...as it won't be as easily attainable...lol.
For want of a nail the shoe was lost, for want of a shoe the horse was lost, for want of a horse the knight was lost, for want of a knight the battle was lost. So it was a kingdom was lost - all for want of a nail.
Very interesting. I've noticed that my account with citibank has been acting differently lately.
Do you have any suggestions for alternatives to citibank? Would love hear your suggestions.
Quote:
Originally Posted by OffshorePrivacy
U.S. Banks Impose Withdrawal Limits
Several weeks ago I received an email from banking giant Citigroup, entitled "Change to Inter-Institution Transfers User Agreement."
Purportedly as a "security measure," Citigroup has significantly reduced its daily and monthly limits on outgoing wire transfers. The daily limit is now US$2,000 and the monthly limit is US$10,000.
Citigroup is by far America's largest bank, with assets exceeding US$2 trillion. It's also one of the most troubled. You might recall that a few weeks ago, the Abu Dhabi Investment Authority provided Citigroup with US$7.5 billion to shore up its balance sheet in the wake of last summer's sub-prime fiasco.
Some experts believe that when the smoke clears, Citigroup will need at least another US$10 billion to bring its capital up to minimum levels. That's due to its decision to take US$49 billion worth of off-balance-sheet investments in structured investment vehicles back onto its own balance sheet. Not to mention its promise to guarantee another US$58 in so-called "special investment vehicles" it manages. And don't forget the US$17.4 billion Citigroup already took in losses and asset write-offs in the last few months.
Even healthy banks have imposed withdrawal limits. My own bank, for instance, recently slapped a US$10,000 daily limit for outgoing wire transfers, or US$50,000/month. That's a substantial improvement from Citibank's limits, but still sobering when you consider that until 2007 (according to banking insider James Sinclair), no major U.S. bank limited outgoing electronic transfers.
If you're a U.S. depositor in Citibank, and have a checking account there, you can write as large a check as you wish to move your money to a stronger institution. But many foreign investors who have U.S. bank accounts don't have access to paper checks. If they want to transfer money out of Citibank, or any other bank that has imposed such limits, they must do so electronically.
Or, they can close their accounts altogether—an option that I suspect will be resorted to much more frequently as 2008 progresses.
The issue with most US banks is two fold; one, they do not have adequate methods of preventing fraudulent access to bank accounts such as with a "digipass". Banks have had to reimburse millions to clients for unauthorized access. Secondly, with the current issues relating to bank liquidity, banks do not want to allow a "run on the bank", meaning clients trying to withdraw all of their money rather than fear losing it, which occurred in 1939 and led to the Great Depression. More simply put, by limiting your withdrawals it is more difficult for the bank to "run out of cash" due to a lack of customer confidence. Accounts are FDIC insured but only up to $100,0000 per account. Anything over 100k would be lost.
It's not just US banks either. It's becoming a big problem in the UK, as somebody explained to me recently. For example, Abbey National started mailing cheques by second class mail, instead of allowing online electronic withdrawals. That means people have to wait a week or even longer for their money.
U.S. Banks Impose Withdrawal Limits
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