Very worrying stop press news re Anglo Irish

Andrew64

gozomark wrote: »

Nobody has been able to confirm that the guarantee is ultimately backed by the EU.

because there is no explicit backing by the EU (via ECB presumably)

I think it mainly depends on the attitude of the Germans. Would they want the ECB to bail-out Ireland? The calculation would be whether or not Ireland going bust would destabilise the Eurozone as a whole.

JP45

Andrew64 wrote: »

I think it mainly depends on the attitude of the Germans. Would they want the ECB to bail-out Ireland? The calculation would be whether or not Ireland going bust would destabilise the Eurozone as a whole.

The key thing, to my mind, is the impact this would have on other member states. If Ireland were allowed to default, then how would the rest of the global financial community react to other EU states where the public finances are under strain, such as Greece, Portugal and Spain. The Germans might be reluctant to intervene but others might well take a different view.

Ultimately, the only way we're going to get through this crisis is if the better off nations are willing to assist those in need. But it won't be out of generosiy of spirit; it will be down to the realisation that if they don't help out then it will ultimately harm themselves. In a global financial community, you can't simply raise the drawbridge.

JamesJames101

I stand corrected - AIB is not short for Anglo Irish Bank.

Melbury - you've done the right thing. You've made a decision that works for you in light of all of the information that you have. When/if it turns out that you have given up £x in interest don't beat yourself up! There is a small risk that monies could be lost - but then I think that there always is.

I would be interested in hearing how you get on with Anglo Irish though.

I just called them myself. Apparently Ireland is AAA rated, HSBC is AA rated, and Iceland was BBB rated. Having said that, Lehman Bros was quite well rated I understand. Of course, both the bank AND Ireland would have to fail before this got nasty - although I suppose if Ireland did fail then that would imact the bank.

So called the Irish financial regulator. Who put me through to Irish Ministry of Finance. They said that no chance that Ireland would fail. But I pushed back and asked what the position was IF (big if) this happened. The chap didn't know but said that he would find out and call me back w the answer. When he does I'll post his reply here.

JP45

JamesJames101 wrote: »

I stand corrected - AIB is not short for Anglo Irish Bank.

Melbury - you've done the right thing. You've made a decision that works for you in light of all of the information that you have. When/if it turns out that you have given up £x in interest don't beat yourself up! There is a small risk that monies could be lost - but then I think that there always is.

I would be interested in hearing how you get on with Anglo Irish though.

I just called them myself. Apparently Ireland is AAA rated, HSBC is AA rated, and Iceland was BBB rated. Having said that, Lehman Bros was quite well rated I understand. Of course, both the bank AND Ireland would have to fail before this got nasty - although I suppose if Ireland did fail then that would imact the bank.

So called the Irish financial regulator. Who put me through to Irish Ministry of Finance. They said that no chance that Ireland would fail. But I pushed back and asked what the position was IF (big if) this happened. The chap didn't know but said that he would find out and call me back w the answer. When he does I'll post his reply here.

It will be interestng to see what sort of reply you get from the Irish Ministry of Finance.

But lets not forget there is one further safeguard in the unlilkely event that the Irish government were to renege on its guarantee to savers and the EU/ECB failed to bail them (and us) out. And that of course is the UK government. There have already been instances where the government has stepped in to compensate savers even though there was no strict requirement to do so. It seems to me prefectly possible that the government would do so again in the event of UK savers losing money with Anglo Irish. The government will never say so explicitly, for obvious reasons, but I still think there's a good chance they would bail us out (up to the £50k limit).

But suppose they did not. Imagine how savers in this country would react if all of us with money deposited in Irish banks were to lose everything. I am convinced it would spark a general panic. People really would start withdrawing their money and stuffing it under the mattress.

melbury

JP45 wrote: »

It will be interestng to see what sort of reply you get from the Irish Ministry of Finance.

But lets not forget there is one further safeguard in the unlilkely event that the Irish government were to renege on its guarantee to savers and the EU/ECB failed to bail them (and us) out. And that of course is the UK government. There have already been instances where the government has stepped in to compensate savers even though there was no strict requirement to do so. It seems to me prefectly possible that the government would do so again in the event of UK savers losing money with Anglo Irish. The government will never say so explicitly, for obvious reasons, but I still think there's a good chance they would bail us out (up to the £50k limit).

But suppose they did not. Imagine how savers in this country would react if all of us with money deposited in Irish banks were to lose everything. I am convinced it would spark a general panic. People really would start withdrawing their money and stuffing it under the mattress.

Yes but would the UK Government compensate people? They didn't compensate the people who had money invested in the Isle of Man:eek:

I don't even know if they will let me have my money back, but I will be a bit upset if the won't. How can they let some people, but not others? If they had a hard and fast rule that NOBODY could withdraw from a fixed rate bond, then we would just have to all sit it out. However, I have read of quite a few people being allowed to withdraw without penalty and interest up to the date of closure.

Interested_Taxpayer

I have a bond maturing on 27 February and have just phoned Anglo Irish to instruct them to BACS it plus interest into my HBOS current account. They offered me 4.3% to keep it with them for a further year!!
What to do? My gut feeling is to get it back and put it elsewhere with a UK bank / building society albeit at lower interest. Any thoughts welcome.

gozomark

keep it where it is

soulsaver

melbury wrote: »

Yes but would the UK Government compensate people? They didn't compensate the people who had money invested in the Isle of Man:eek:

Why would the UK tax payer bale out non UK banks taking deposits outside the UK?
Anglo is a non uk bank trading IN the UK, and regulated (fully in the first instance & limited now) by the UK FSA. IMHO the UK gov would do the honourable thing.
In fact I'd say there is CLEARLY a better case for them to do 'the right thing' for capped compensation in the event that Ireland defaults, than the case for compensating depositors above the £50k limit in Icesave.

GeorgeHowell

The lesson of Icesave should have been enough for everyone to move/keep their money only where HMG has a political motive in safeguarding it, come what may.

melbury

Interested_Taxpayer wrote: »

I have a bond maturing on 27 February and have just phoned Anglo Irish to instruct them to BACS it plus interest into my HBOS current account. They offered me 4.3% to keep it with them for a further year!!
What to do? My gut feeling is to get it back and put it elsewhere with a UK bank / building society albeit at lower interest. Any thoughts welcome.

I would have stuck with Anglo Irish Bank if my bond only had a couple of months to go. Some days I am convinced it will be OK, but then I keep getting a niggle that our life savings could be lost and I would rather lose some interest than the whole lot. I suppose I am about 98% certain that it would be OK, but just find that 2% of doubt very unnerving.

Of course it yet remains to be seen whether or not they'll let me withdraw the money.