Irish bank deposits guaranteed by Irish Govt, no limits

ballyblack

From RTE, 30 Sept 08, 7.00 am

"The banks that are covered are: Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Irish Nationwide Building Society and the Educational Building Society and specific subsidiaries that may be approved by Government following consultation with the Central Bank and the Financial Regulator.

Recently the Government guaranteed deposits of up to €100,000. now it has gone further to cover all major deposits by financial institutions with Irish banks.

Its guarantee also covers all money borrowed by Irish banks from other financial institutions.

The statement from the Department of Finance says all deposits, bonds and debt will be covered by the State.

Essentially this is a guarantee that if any Irish bank faces serious problems the Government will step in.

The two-year guarantee is being provided on commercial terms to the institutions.

The backing would be subject to conditions that would protect taxpayers' interests.

The Department says the step is being taken to remove any uncertainty surrounding banks.

It adds it is a very important initiative by the Government designed to safeguard the Irish financial system.

In the coming hours it will be clear if the move is enough to stop the enormous slide in Irish bank shares."

Pretani

This does not effect accounts in N.Ireland. Accounts in Irish owned banks which are in N.Ireland are covered by the UK deposit protection scheme which is up to £35 thousand.

However, it will be interesting to see how this decision will work along side EU law, as the Irish governemnt are only protecting deposits in Irish owned banks but not in banks owned by other EU countries, like National Irish Bank, ACC, Rabobank or Ulster Bank. It also is going to cost the Irish taxpayer around €500bn.

36square

I think you must be referring to the poetntial cost if all the banks go bust. The Irish government is charging the banks a premium for this guarantee so Irish taxpayers could actually gain fom this.

seatzie

Pretani I think you are wrong on this, as long as the bank is headquartered in Ireland eg. Bank of Ireland, customers here will benefit, last week Martin confirmed this in his email though that was when limits were up to €100,000

heres Martins blurb incase you missed it
Post Office, Bank of Ireland & Anglo Irish Bank. The Irish Deposit Protection Scheme threshold's just increased to €100,000 (c. £80,000). The two big Irish banks operating in the UK (Post Office Savings is part of BoI) have opted for the ‘passport scheme’ of protection, which means in the unlikely event they went bust, the money'd first come from their home scheme, then any remainder'd be topped up by the UK's. Yet now the Irish scheme covers more than the UK's, so UK savers get the whole £80,000 protection!

Pretani wrote: »

This does not effect accounts in N.Ireland. Accounts in Irish owned banks which are in N.Ireland are covered by the UK deposit protection scheme which is up to £35 thousand.

However, it will be interesting to see how this decision will work along side EU law, as the Irish governemnt are only protecting deposits in Irish owned banks but not in banks owned by other EU countries, like National Irish Bank, ACC, Rabobank or Ulster Bank. It also is going to cost the Irish taxpayer around €500bn.

Pretani

They'll only gain if the Irish banks hold onto their excisting customers and that includes property developers, which aren't in the best state of affairs right now. The Irish banks already have bad loans which they haven't written off. If for some reason the banks fail to keep their customers and the rest of Europe doesn't join in, Europe will see this as illegal state aid.

Pretani

seatzie wrote: »

Pretani I think you are wrong on this, as long as the bank is headquartered in Ireland eg. Bank of Ireland, customers here will benefit, last week Martin confirmed this in his email though that was when limits were up to €100,000

My mistake, You're right seatzie. It seems that the Irish government have decided it includes all Irish banks and their subsidiaries in the UK - separately authorised or not.

BigAl94

This is actually very tough on all the other UK banks operating in Ireland both north and south. Basically the Irish government had to act as at least one of the Irish banks was in imminent danger of collapse with share price falling by between 40 and 50 percent on Monday. This may well still happen. Now it means that Irish banks with poor balance sheets and lower credit ratings can attract deposits ahead of well funded large multi nationals with excellent credit ratings. Very unfair and is being investigated by the EU. What we really needed was a robust decision by Gordon Brown & Co to go down the same road but all we got was a pathetic increase from £35K to £50K in the deposit protection scheme - typical!!
For any large investor EU wide, it is a no brainer to invest in an Irish bank with full state protection for the next 2 years. Waken up Gordon!

The average personal account holder or depositor has nothing to fear by staying with non Irish banks - first £50,000 is fully protected and very unlikely in any case that any of the main players will suffer - the problem is the scare mongering and lack of confidence at the moment.

Pretani

BigAl94, I don't think Gordon Brown has to make a similar move to the Irish Government. The UK Government ownes Northern Rock and it gives 100% guarantees for those people who have more than £50k to invest, so as you've already said it's a confidence issue. Would large investors feel their money is safer with Northern Rock (owned by the UK Government) or an Irish bank (guaranteed by the Irish government).

I know where my money would be and it's not with the Irish Government who haven't enough money to bail the banks out should they fail