Term Deposit in Iceland LANDSBANKINN

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behanl

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Has anyone ever taken out a term deposit with Landsbankinn in Iceland. Rates are very good but is there much risk?
 
Yes I read about the 2008 freezing of accounts etc, but I think thats well behind Iceland now. Not sure of the currency they will take, Euro prefered. LB where upgrade by S&P twice in the past 12 months. [broken link removed] The do allow foreign depositors but they take 10% of you interest in tax. However, LB are paying in and around 5-6 % depending on term

I just have no experience of foreign deposits, so looking for any guidance from anyone who has.
 
There is clear link between interest rates and the expectations for inflation and currency.

If some bank is paying 6%, when there are negative interest rates elsewhere, it's likely that the currency will adjust so that your net return will be about the same. Or else, you are taking excessive risks with your deposits.

Brendan
 
Ghana issued a government bond the other day that pays 9% per annum.

Why not invest in that?

Because the ridiculously high return is a function of the higher probability of not getting your money back.
 
behanl said:
LB where upgrade by S&P twice in the past 12 months.
Click to expand...

Well first of all that evaluation was paid for by thr bank and second of all it refers to credit instruments issued by the bank, not how solid it is as a deposit taker.

For an Icelandic bank you'd need to see a T1 ratio well into double digits to even consider it and even then it would still be iffy!

Last time I looked there was a 39% deposit withdrawal tax applicable to residents, meaning it is difficult to understand the true state of their banks.

The there is the interest rate - a high rate always means higher risk, there are no exceptions!
 
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