Very worrying stop press news re Anglo Irish

grnglide

baffcat wrote: »

I invested £25k in a fixed rate Anglo Irish bond in September, when they were members of/covered by the FSCS. Personally I'd be very surprised if HMG could or would turn their backs on savers who'd opened accounts when covered.

Before the Irish govt increase in cover to unlimited / 100,000 Euros the first 20,000 Euros was covered by the Irish scheme and only the amount over this was covered by the FSCS.

HMG could, if they wished, "turn their backs" as HMG has not changed anything.

If the Irish government defaulted (still extremely unlikely) no-one could know what would happen - the repurcussions would be felt all over Europe.

JP45

baffcat wrote: »

I invested £25k in a fixed rate Anglo Irish bond in September, when they were members of/covered by the FSCS. Personally I'd be very surprised if HMG could or would turn their backs on savers who'd opened accounts when covered.

Mind you, I would also have believed that HMG would realise they're shooting themselves in the foot by lowering interest rates when there are seven times as many savers as mortgage holders, so what do I know?

I agree. I think HMG would look favourably upon those who had opened fixed rate bonds with Anglo Irish - in my case around 18 months ago - when it was still covered by the FSCS. But as others have pointed out, you'd never get an up-front commitment to that effect from HMG.

masonic

JP45 wrote: »

I agree. I think HMG would look favourably upon those who had opened fixed rate bonds with Anglo Irish - in my case around 18 months ago - when it was still covered by the FSCS. But as others have pointed out, you'd never get an up-front commitment to that effect from HMG.

Even if they agreed to pay out under the original compensation terms, the UK would be exempt from paying the first €20,000 of compensation.

Manics_2

I've got £50k in Anglo Irish in a 1 year fixed rate which started in the first week of January this year. I'm not worried about it.

Ireland has the Euro.
Irelands getting picked on at the moment. That will pass soon.
I took out the bond when covered so I think UK would look after me.
The Irish government will honour the guarantee if they need to.
The ECB will step in if they default.
The IMF are also on hand.

Thats a lot more comfort than I get from bonds held in other institutions.

redouma

Would the British Government step in if UK depositors in Irish Banks went bust? With the amount of money the UK Government is currently spending on bailing out our own banks I wonder if there would be anything left over to help savers with money in a whole owned/covered Irish Bank - perhaps they would if enough people demonstrated I somehow think that they would not hence as previously said I withdrew all my deposits with Anglo.

My problem now is where on earth do I put it? Do I tie it in another Fixed Term Bond currently best on offer 3.75% gross or stick it back into premium bonds until after 22nd April Budget day? Plus ISAs will be maturing on 24 April this is held currently with LLoyds Banking Group - I sure know how to pick these banks dont I?

Palm_Centro

Oh - is it the fact that Allied Irish was nationalised that is causing all the fuss?

Andrew64

The company I work for has subsidiaries in several European countries, including Ireland. Last week there was a group finance meeting, and after it I ended up having a nice chat with the Irish rep. He told me that he had just asked for - and received - permission to move most of their money into an account in a British bank just over the border in Northern Ireland as they had no confidence in the Irish banking system! He personally knew several businessmen who feel the same way.

Manics_2

I have posted this same link in the Economy board.
It is felt that because of Ireland's deficit (at 11%) the country is heading for collapse. Well guess what, thats exactly where the UK is heading!
http://uk.biz.yahoo.com/16022009/140/recession-hit-uk-must-borrow-extra-pound-100bn.html

So, at least Ireland has the Euro and if you're in Anglo Irish you are nationalised.

If you're believing the hype and losing sleep over Ireland, you should be loosing sleep over anything you have in the UK as well.

JamesJames101

How can the Irish government go back on its promise to guarantee all savings in certain banks - especially Anglo Irish (as nationalised).

Countries don't disappear (like companies do) - so basically the Irish government would have to default on its promise (to a lot of its voters) to pay the money back. And even if it did - which would be political suicide and likely reversed when the next party got in - surely there would be a legal claim against the government for the money.

Sounds very far fetched. Eurozone would be finished, EU would be finished, and people would still want their money back. And the nationalised bank of Ireland would cease to exist!

At worst I think that there might be a time delay in getting money back - mind you if they keep paying me 7.05% even after the maturity date of my bond I don't think I would be too upset!

Bottom line is that ECB could print more Euros to pay the debts - would have inflationary pressures but these days that it probably a good thing.

JamesJames101

Just spoken to Irish Treasury. Firstly Irish debt is 24% of GDP which is one of the lowest in Europe. This is expected to increase to 35/40% - ie almost as much as the UK government. This is thought to be recent behind jump in cost of insuring against Irish default. Ireland therefore has no problems in issuing bonds to cover its debt obligations. Apparently debt needs to be 70/80% of GDP before this could happen.

I pointed out that deposits at banks are about 200% of GDP - he replied that the banks' assets would not disappear and these could be used to pay back monies.

Pressing more, if the debts got so big that Ireland was not able to find buyers for its bonds, then historically the IMF has stepped in (Argentina). He said that he couldn't say what would happen in the Eurozone countries - but they would take it very seriously and so it is possible that they would help. As has never happened, and no-one even sees it as a possibility (except the media) then there are no protocols in place to cover this.

He finished by saying that Ireland will still be around at the end of the year (my bond expires in November).

It will be interesting though to see what happens when the guarantee expires in 2010 - I would have thought that they will have to extend the time zone unless global economy has started to recover by then.