CANBERRA - The Australian government will charge a fee for guaranteeing local-bank deposits worth more than A$1 million ($670,000), Treasurer Wayne Swan said on Friday.

The government this month announced a blanket guarantee on all local-bank deposits and wholesale funding, saying
Australian banks would be disadvantaged in capital markets if they did not have similar guarantees to foreign rivals.

But the move sparked a flight of capital out of non-guaranteed savings institutions, such as managed funds and
foreign-bank branches, leading to calls on the government to rethink its guarantee system.