Irish nationwide - safe?

Richard_Branston

Are the fixed rate bonds from Irish Nationwide safe? (ie £50,000 guaranteed)
Also can you explain why the short term bonds have a higher AER than the longer term bonds. 4.5% to 4.0% - very competitive

cheers,
Richy B

ps my first post

opinions4u

Richard_Branston wrote: »

Are the fixed rate bonds from Irish Nationwide safe? (ie £50,000 guaranteed)

This would not be covered by the UK Financial Service Compensation Scheme, but by the Irish equivalent. The Irish government provides an unlimited guarantee. The problem is, what happens if Ireland goes bust as a nation?

Also can you explain why the short term bonds have a higher AER than the longer term bonds. 4.5% to 4.0% - very competitive

This is a € (Euro) account, not Sterling. Eurozone interest rates have further to fall, so shorter term rates are higher.

Baldur

Irish Nationwide is not FSA authorised - it is EEA authorised, so would be covered by the Irish compensation scheme, not the UK FSCS £50,000 scheme.

agsnu

Irish Nationwide operate in Ireland.

Irish Nationwide (IOM) operates in the Isle of Man.

I assume you're referring to the latter, which operates sterling deposits.

Neither of these is covered by the FSCS, as they do not operate in the jurisdiction of the FSA. The IoM operates its own deposit protection scheme, which has recently been amended to be up to £50k IIRC, but is somewhat flakier than the UK protection (see http://www.ksfiomdepositors.org/).

asbokid

According to the Financial Times, the Irish Nationwide is in the doo-doo.

The controversial chief executive, Michael "Fingers" Fingleton is resigning from the Society. With a "shell shocking" 2008 report due shortly, his resignation is timely....

From the FT, April 3, 2009 - "Irish Nationwide chief to retire":

Fingleton, a 71-year old former barrister..and native of County Roscommon..transformed the Irish Nationwide from a building society focused on residential loans to a specialist property lender, with three-quarters of its loan book in commercial lending.

In his final year, "Fingers" gouged more than £915,000 in bonuses from the Members. Last year "Fingers" was Ireland's highest paid chief executive with a total salary of well over £2 million.

Irish Nationwide has perhaps the most toxic loan book of any mutual. Avoid at all cost....

asbokid

From the Irish Independent (April 3, 2009)

Irish Nationwide has written off hundreds of millions in loans to property developers.

"The investment bank JP Morgan believes that it may have to write off €1.35bn (11pc) of its loan book and may need a bailout of €900m.

"But in all the talk of money that surrounds Mr Fingleton and the society, one point seems to have gone missing.

Mutual societies traditionally attracted small investors and lent for house purchases. Was there ever any reason why they should engage in commercial lending?