Post Office /Bank of Ireland

gozomark

the one that could be an issue is the present rate - what is Anglo Irish's current rate for borrowing ?

whatever, its difficult to come up with a positve penalty rate

john_s_2

I'm gonna take a wild guess here and say that the Replacement Interbank Market Rate is the LIBOR rate that represents the remainder of the fixed term. LIBOR comes in various flavours depending on how long the bank is borrowing the money.

The PO have lent your savings to someone so if you take your savings out, they need to replace the money. By borrowing it from another bank, to repay it when your bond was due to expire. (This is my reasoning behind my wild guess!)

You can download historical LIBOR rates here:

http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=141&a=627

Note that they change every day (and I think, during the day) but cos the above is free, they're always a few days old.

Assuming the 2% is correct in your sum below:

1000 x ( 2%-7%) x 300 dys left

Then I make it:

1000 x -5% x 300 =
-50 x 300 =
-15,000

Which doesn't make sense ;-)

Ah, needs to be divided by 36,500 so that's -41 pence.

*shrugs* I reckon if you withdraw early they have to pay you 41 pence.

Maybe the charge is if they have to borrow the money at a HIGHER rate than LIBOR - but I doubt this is the case now. 300 days is about 10 months. On 19 January the 10 month LIBOR rate was 2.545%.

*shrugs again*

I'm probably way off the mark so take no notice of me :-)

gozomark

can Anglo Irish borrow at LIBOR at the moment ?

john_s_2

Ah, I knew there was a flaw in my reasoning. I knew that LIBOR was the average of rates that banks borrow from each other. So what you're saying is that different banks will lend (or be able to borrow) at various rates, depending on how keen they are to lend, or how creditworthy they are considered to be?

That makes a lot of sense, and hence your earlier post (which you posted while I was waffling on). Cheers!

ANGLICANPAT

Still cant see how that sum could work at all.

gozomark

all the formula really comes down to is this -

if it costs them more to replace your money than they are paying you, then you pay the difference - eg you saved at 7%, they repay you by borrowing at 5%, no penalty. What we don't know is what their cost is in replacing your money

Richchad

Had a phone call from the Post Office to tell me that there will not be any Breakage Charge and interest will be paid up to the date I close the account at the full rate.:j

Now if I close the account where shall I put the money....another fixed account, or do I leave it and take a chance...hmmm

As I have about 7 months left to go, the difference of another account at about half the interest rate is only worth about an extra £500 before tax to me, is it worth risking it for that?

gozomark

come on, lets be serious, what risk ? Is the Irish Govt really a significantly higher risk than the UK Govt ? If you really think its yes, then go ahead, throw away the £ 500 - if thats what makes you feel happier, and to you its only £ 500 then do it - in the end its your call, you are the one how has to live with it, only you know if its worth it to you

amistupid

Richchad wrote: »

Had a phone call from the Post Office to tell me that there will not be any Breakage Charge and interest will be paid up to the date I close the account at the full rate.:j

Now if I close the account where shall I put the money....another fixed account, or do I leave it and take a chance...hmmm

As I have about 7 months left to go, the difference of another account at about half the interest rate is only worth about an extra £500 before tax to me, is it worth risking it for that?

I'd love to play you at poker.

grnglide

ANGLICANPAT wrote: »

"B of I is a member of the Financial Services Compensation Scheme established under the Financial Services and Markets Act 2000. In respect of deposits with a UK office, payments under the scheme are limited to 100% of the first £35k of a depositors total deposits with the bank"


Seeing as how a lot of people like me will have gone ahead with this , partly because of the feeling of safety you get with the PO name, and partly because they , like me, saw that it was under the FSA for the amount of money I had in -- how can they get away with now telling us we are no longer covered by anything but the sinking Irish Government? Legally they might manage it, but morally? And with so many 'little savers' probably entering trustingly in this bond , I reckon if Ireland cant fulfill its guarantees then the British Govt would have uproar on their hands to act for PO savers with the Irish Bank , as they did for Iceland? although,--- that letter the PO has sent out , is probably on the instruction of our Govt who are grateful they can squeeze out of it?

If those paragraphs above do NOT indicate that we were under the FSA when we took out the bond, then I think the wording was grossly misleading
:mad: :mad: :mad:

Bank of Ireland (and Anglo Irish) were both passported in to the FSCS scheme (like IceSave, ING (I think) and others). This means that FSCS covers only the difference between their own country's scheme and the FSCS scheme. In the case of IceSave it was the UK government who chose to cover the Icelandic responsibilities, not the FSCS (so FSCS covered between 20,000 euros and £50,000).

Once the Irish government guaranteed the whole amount of all deposits the EU ruke over this was that the FSCS no longer had any obligations and the letters last week were to bring that to the notice of the investors (instigated by either the FSA or the FSCS).

They havent moved the goalposts, it was simply an odd result of the Irisg government decision.

The risks are very low (especially for Post Office accounts) - do you think HMG could stand by while investments with the Post Office failed?

A friend withdrew a 7% bond in the Post Office this week (terminating 9 months early) and the calculation of the exit calculation was that he got the full interest for the period the money was with them - not bad. He also withdrew from a similar deal with Anglo Irish and got very little which is not unreasonable for terminating a "fixed term" early.

Investors need to understand the true meaning of "fixed term" - you get a higher rate of interest (at the point of opening at least) in exchange for investing for a fixed term. In these uncertain times this does matter!