Very worrying stop press news re Anglo Irish

GeorgeHowell

JP45 wrote: »

Exactly, and I really can't see Anglo Irish accepting any more requests for withdrawls from UK bond holders based on suspiciously timely family emergencies. There's got to come a point where they invoke the 'at their discretion' qualifier and effectively deny any further such claims, and I would have thought they must have reached that point by now.

The day that a bank declines to pay out 'at its discretion' is the day that we know it is in trouble. I suspect that the existence of that clause in the T&C was because they knew that they might get into that position during the life of the investment. I didn't notice this in the small print before buying the bond, but I would look harder for things like that in future and avoid them like the plague.

gozomark

many fixed term accounts at other banks simply say "no withdrawal, full stop", and have done for years, so I wouldn't take the existence of the clause as evidence they thought they might get into trouble -after all, its a fixed term -why should any bank give you the option of early withdrawal

GeorgeHowell

gozomark wrote: »

many fixed term accounts at other banks simply say "no withdrawal, full stop", and have done for years, so I wouldn't take the existence of the clause as evidence they thought they might get into trouble -after all, its a fixed term -why should any bank give you the option of early withdrawal

Certainly many do say no withdrawals whatsoever, and you know that up front. Others simply let you withdraw and penalise the interest. But to hedge their bets with 'at our discretion' says to me that they want to appear competitive by allowing withdrawals in order to attract the funds, but they want to retain the ability to put the block on it if they experience liquidity difficulties. Why else would they do this ?

JP45

GeorgeHowell wrote: »

The day that a bank declines to pay out 'at its discretion' is the day that we know it is in trouble. I suspect that the existence of that clause in the T&C was because they knew that they might get into that position during the life of the investment. I didn't notice this in the small print before buying the bond, but I would look harder for things like that in future and avoid them like the plague.

Well to be fair to Anglo Irish, I have a copy of the Terms & Conditions dated 11 February 2005 (ie pre the Credit Crunch) and it does make clear that withdrawals for emergencies are effectively at their discretion:

4.1 Withdrawals are only allowed in the case of an emergency and if permitted by Us and will be subject to the following Charge....

Can't say I paid much attention to such things when I opened the bonds in those innocent days before the credit crunch struck. Frankly, I would imagine most banks have some form of 'at our discretion' caveat. It's exactly the sort of thing one might expect their legal advisers to insert. Let's face it banks aren't the most customer-friendly institutions.

GeorgeHowell

I suspect that the 'emergency' that they really have in mind is their own impending illiquidity and inability to pay out. I also have not looked carefully in the small print in the past, but have never seen or heard about such a clause before.

dor123

I asked for my money back from bonds, as I wouldn't have put my money in there without at least the £16,000 in back up from the UK. In spite of them changing the conditions, blaming EU law, they wouldn't give it back. A bit strange seeing as the Post Office ( Bank of Ireland ) is allowing this. They quoted that the Irish economy had a AAA rating from Filch, same as UK. Are they at the kidding ?

gozomark

dor123 wrote: »

They quoted that the Irish economy had a AAA rating from Filch, same as UK. Are they at the kidding ?

no, they are telling the truth

Ireland - Long Term Issuer Default Rating AAA 20-JAN-2009 Affirmed Outlook: Stable

UK - Long Term Issuer Default Rating AAA 21-AUG-2008 Affirmed Outlook: Stable

melbury

dor123 wrote: »

I asked for my money back from bonds, as I wouldn't have put my money in there without at least the £16,000 in back up from the UK. In spite of them changing the conditions, blaming EU law, they wouldn't give it back. A bit strange seeing as the Post Office ( Bank of Ireland ) is allowing this. They quoted that the Irish economy had a AAA rating from Filch, same as UK. Are they at the kidding ?

Did you make the same mistake as me in being totally honest and saying that you wanted the money back because of the change in T&C's?

Midnight_Cowboy_2

JP45 wrote: »

Exactly, and I really can't see Anglo Irish accepting any more requests for withdrawls from UK bond holders based on suspiciously timely family emergencies. There's got to come a point where they invoke the 'at their discretion' qualifier and effectively deny any further such claims, and I would have thought they must have reached that point by now.

Well, it's not really right to say 'invoke' it. It's always 'invoked'. It just depends on whether they exercise their discretion.

melbury wrote:

I haven't seen anything that says the Irish Government may not honour their guarantee - how could they do this? That would be totally dishonourable.

Er... isn't the whole point of this thread that they may not honour the guarantee? If it was 100% sure they could honour it, we wouldn't have anything to worry about. The problem is not that they might sulk and not pay out, it's that they've made a guarantee worth between €400bn and €600bn (depending on your source), and with the entire annual tax revenues of Ireland being €37bn, might struggle to honour it should they be called upon to do so.

GeorgeHowell wrote:

I suspect that the existence of that clause in the T&C was because they knew that they might get into that position during the life of the investment. I didn't notice this in the small print before buying the bond, but I would look harder for things like that in future and avoid them like the plague.

I'm sorry George, but that makes no sense. A bank offers customers a 'get out' clause because it thinks it might be getting into trouble? Are you saying that you would choose a bond with no get out over one with a get out?

For me, the possibility of withdrawal (even with penalty) was what edged it for Anglo Irish over the competition.

melbury

Midnight_Cowboy wrote: »

Er... isn't the whole point of this thread that they may not honour the guarantee? If it was 100% sure they could honour it, we wouldn't have anything to worry about. The problem is not that they might sulk and not pay out, it's that they've made a guarantee worth between €400bn and €600bn (depending on your source), and with the entire annual tax revenues of Ireland being €37bn, might struggle to honour it should they be called upon to do so.

To be honest, I can't even remember the beginning of the thread with any absolute clarity, so much has been said on the subject. Sorry to have made such a gaffe. I worry about this every day and November seems such a long way off.