Very worrying stop press news re Anglo Irish

soulsaver

Midnight_Cowboy wrote: »

I'm a but doubtful about your maths! The penalty will be the same whenever the withdrawal was made. At 4%, that would be £95000*4%*60/365*.8= £499.73 net. If the money was withdrawn before 60 days, the investor would receive less than they'd paid in; I mentioned this because WD40 might want to avoid the psychological pain of that, plus having to explain to his mother where £500 of her money had gone!

WD40 will be slightly better off if he/she stays in for 2 months, because they will be earning 4% on the money rather than what they may get in another typical savings account. If they closed immediately, and deposited the money at, say, 3% the return would be:

£95000-£500 penalty=94500*3%*.8= £2268 net. In 1 yr WD would have £96768.

If on the other hand WD withdraws after 60 days, they will receive back £95000 (60 days interest loss as penalty). If they then deposit the money for the next 10 months at 3%:

95000*3%*10/12*.8=£1900 net, so £96900 in 1 yrs time.

So, WD would be better off by £131 approx. WD has already been in for a couple of weeks, so by the time a withdrawal goes through he/she might be 30 days into the bond term anyway, halving the loss to £65 ish. If I'd made my mind up to get out, I'd forego the £65 to £131 to avoid 2 months of sleepless nights. To be honest, WD has far more to lose by staying in (like his/her mother's house, apparently!) than getting out. I know what I'd do.

For myself, the only reason I haven't asked for my money back yet is that my loss would be much greater than WD's, my bonds are 7.05% and 5.75%. So to revert to normal savings rates of 3% or so would lose me over a grand. At the moment, greed is beating fear and keeping me in.

My maths was fine and demonstrates the near zero difference between leaving it in for 2 months or taking it out now and getting the same interest rate elsewhere. I assumed his mother was entitled to gross, but actually it makes no difference. In 2 months time capital would be nigh on same; one way gains interest and then loses it all, the other loses the interest and then gains it back.
The point is if it would be allowed out in 2 months then he may as well try to get out now, and then he has options open to him that may not be around in 2 months time.

Midnight_Cowboy_2

soulsaver wrote: »

My maths was fine and demonstrates the near zero difference between leaving it in for 2 months or taking it out now and getting the same interest rate elsewhere. I assumed his mother was entitled to gross, but actually it makes no difference. In 2 months time capital would be nigh on same; one way gains interest and then loses it all, the other loses the interest and then gains it back.
The point is if it would be allowed out in 2 months then he may as well try to get out now, and then he has options open to him that may not be around in 2 months time.

Yes of course, if you take out the money and get the same rate elsewhere then it makes no odds; I would do the same if I could get 7% elsewhere!

Midnight_Cowboy_2

melbury wrote: »

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.

No need to apologise. This has been an epic thread. I just noticed it has had over 17000 views!

soulsaver

Midnight_Cowboy wrote: »

Yes of course, if you take out the money and get the same rate elsewhere then it makes no odds; I would do the same if I could get 7% elsewhere!

well if the poster in question was getting 7% he may also see it differently. But as he said he has just had confirmation his initial deposit cleared, that's clearly not his position? He can get 4% fixed in UK protected accounts if he could get his money back now - but no saying he can in 2 months was my point...

soulsaver

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 ?

I believe the Fitch ratings are the same. Its the media that have Ireland ahead of us in the race to oblivion...
Starbucks boss brought UK into disrepute, I think we should boycott his coffee shops.
What interest rate are you getting? And how long until maturititty?

Mr._H_2

WD40 wrote: »

http://www.independent.ie/business/irish/irishowned-banks-liabilities-to-reach-combined-total-of-8364575bn-1643139.html

That article is classic doom-mongering. No mention whatsoever of the bank's assets - only their liabilities.

It's like saying about me, that my liabilities are over £100,000 and my income is under £10,000 so it's going to take me a very long time to pay everything back if my creditors suddenly want all their money back. But when you consider the fact I own a flat worth about £250,000 and have savings of over £40,000, suddenly it doesn't look so bad...

Mikeyorks

All of this made me check to see when mine matures. Ah well .... 7 months is 5 less than when it started!

But if anyone spots bubbles around the Irish coast and suggesting it's sinking .... we can club together and get some of those handy airbags that kept the Puma afloat in the North sea yesterday.

baby_boomer

Telegraph - Anglo-Irish finds 840m of new losses (double it's November forecast)

A bit more specific detail.

"In a statement ahead of its 2008 full-year results, AIB said bad debts would amount to 1.37 percentage points of all lending compared with a forecast made on November 5 of 0.75 points. The bank said: "Asset quality has further deteriorated as economic conditions have worsened. Consequently, the bad debt provision has materially increased." The result is that the bank's earnings per share will halve to 66 cents from last November's estimate of 120 cents. Capital has also been eroded faster than hoped, with the core tier-one ratio – a key measure of financial strength – sinking to 5.7pc against forecasts of at least 6pc...."

"......The bank last week accepted a €3.5bn capital injection from the Irish state, lifting its tier-one ratio to 8.2pc, as it grapples with fallout from the end of Ireland's property boom."

Mr._H wrote: »

That article is classic doom-mongering. No mention whatsoever of the bank's assets - only their liabilities.

It's like saying about me, that my liabilities are over £100,000 and my income is under £10,000 so it's going to take me a very long time to pay everything back if my creditors suddenly want all their money back. But when you consider the fact I own a flat worth about £250,000 and have savings of over £40,000, suddenly it doesn't look so bad...

The trouble with banks is that their assets are their mortgages and loans!

gozomark

baby_boomer wrote: »

Telegraph - Anglo-Irish finds 840m of new losses (double it's November forecast)

except that article is about Allied Irish not Anglo Irish....

gozomark

for those commenting that there will be a run on Irish Banks if Ireland's credit rating is downgraded from AAA - what do you think will happen if the UK's credit rating is downgraded ?
http://www.independent.co.uk/news/business/comment/hamish-mcrae/hamish-mcrae-the-chickens-have-come-home-to-roost-for-our-public-finances-1627085.html

"The UK will almost certainly lose its AAA credit rating this summer as the deterioration in public finances become evident"