Irish government guarantee bank deposits

Stavros_3

GORDON BROWN PRIME MINISTER BOTTLES IT.
Quote:- He declined to offer an unlimited guarantee, as has happened in Ireland, but pointed out the government had not let any UK depositor lose out.

http://news.bbc.co.uk/1/hi/uk_politics/7644818.stm

gozomark

thrupence wrote: »

AIB is Allied Irish Bank Group, the largest or second largest bank in Ireland.

not necessary, it could also be Anglo Irish Bank, which has the same initials, and what most of this discussion has been about

SilverScooby

Stavros wrote: »

GORDON BROWN PRIME MINISTER BOTTLES IT.
Quote:- He declined to offer an unlimited guarantee, as has happened in Ireland, but pointed out the government had not let any UK depositor lose out.

Wonder how many savers moving funds to Ireland it'll take for that to change.......

He's wrong about the Irish taxpayer funding this - if he'd read the press release he'd know "The guarantee is being provided at a charge to the institutions concerned"

gozomark

SilverScooby wrote: »

He's wrong about the Irish taxpayer funding this - if he'd read the press release he'd know "The guarantee is being provided at a charge to the institutions concerned"

sorry, but Irish taxpayers are funding it - the banks are paying an unspecified insurance premium (ie the charge), but its the Irish taxpayers who are underwriting the insurance policy

thrupence

gozomark wrote: »

not necessary, it could also be Anglo Irish Bank, which has the same initials, and what most of this discussion has been about

Yes, necessarily. AIB is Allied Irish Banking group.

Plasticman

SilverScooby wrote: »

Wonder how many savers moving funds to Ireland it'll take for that to change.......

Great for the Irish banks though. Moving from a dire shortage of cash to loads of savers in the UK wanting to give them their life savings!

gozomark

thrupence wrote: »

Yes, necessarily. AIB is Allied Irish Banking group.

In post 8 I referred to AIB as an abbreviation for Anglo Irish Bank- I may well have been wrong to have used it as an abreviation, but in this thread AIB has been used in relation to both banks, hence why I said not necessarily. I think for clarity its best if we all use the full names :-)

IGK

Looks like the US authorities are considering raising the $100,000 limit to $250,000
http://www.bloomberg.com/apps/news?pid=20601087&sid=ayB4IpkH_MkY&refer=home

All makes the £35,000 look very inferior.
It's all very well implying that the government will do all that's necessary for savers not to lose money, but that's not the same as a cast-iron guarantee, and in these current times, that makes a lot of difference to confidence.

gozomark

none of these guarantees are strictly cast iron, esp. not the Irish one - if all six of the Irish banks went bust, there is no way the Irish Govt/tax payer could compensate all deposit holders as it would total 2 years of GDP thats what Gordon Brown is saying, don't make promises you can't keep if the worst came to the worst

EalingSaver

IGK wrote: »

Looks like the US authorities are considering raising the $100,000 limit to $250,000
http://www.bloomberg.com/apps/news?pid=20601087&sid=ayB4IpkH_MkY&refer=home

All makes the £35,000 look very inferior.
It's all very well implying that the government will do all that's necessary for savers not to lose money, but that's not the same as a cast-iron guarantee, and in these current times, that makes a lot of difference to confidence.

What do you expect from this government? Their interminable dithering over what to do with the Rock has set the tone for how UKs response to this situation is perceivced. What was needed was swift decisive action and leadership. They didn't provide it. Why flag an increase to £50k but then not actually get on and enact it for months. Regardless of whether compensation scheme actually means anything in the end, the GB/AD response to this situation has been largely pitiful. I would lay some blame at BoE as well, except for the fact that the regulation structure that was put in place (split between BoE,FSA etc) was of course a GB invention.

If its true that the £35k represents 94% of all deposits, why eff around? for the hypothetical cost of the remaining 6% you might as well put in a temporary 1 year/2 year gurantee for all deposits. |If you want ot stop dumping of multi million pound individual deposits from other countires, cap it at something like that. And a time limit on the gurantee should hopefully helpo to answer the long term 'moral hazard issue'.

Even if the guarantees are worthles in the event of banking collapse (inflation, taxation etc.) at the moment confidence and theredfore pereception is everything.

Mind you, I noticed today that the CDS rates on Irish government debt has just doubled........so the impact is probably higher cost of government borrowing. Oh, that's why the UK government hasn't done it. They've allowed UK government borrowing to balloon even during an economic boom, its going to get even worse with tax receipts going down and the cost of taking varous banks onto the UK govt balance sheets. The last thing they need is an increase in the cost of govt borrowing. Good old GD "we've eliminated boom and bust...."