# 2 potential threats (IMF or rejection from Euroland) and the effects on our savings



## Godfather (20 Sep 2010)

Hi,

I'm getting more and more confused by 2 schools of economists:
1) the ones thinking that Ireland might have to ask for help to EU and IMF like Greece (the financial investors seem to bet on this as the cost of Ireland borrowing money keeps increasing as I type)
2) the ones thinking that Ireland might have to go out of Euro-land for a while until public finances are restored as credible

I still don't understand how the 2nd hypothesis might become real. Do the EU treaty consider any option to "push out" a country from the Euro?

I would prefer this thread to be kept on the deposits section because here we are talking about our savings and how they are impacted pls.

In the 1st case I don't see much risk (or am I over-optimistic?  ) while in the 2nd case I am worried that the newer Irish Pound would be so devaluated for quite a long while compared to the Euro-land. 

Any thoughts/opinions would be so welcome.


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## aristotle (20 Sep 2010)

I don't see risk for depositors in scenario 1 either.

On scenario 2 I am of the opinion that it won't happen but thats neither here nor there. If it did happen is it really a bad thing if all your deposits, your earnings and all your liabilities (loans, mortgages) are converted to some new currency. I guess it would hit you if trade outside of Ireland or when travelling and converting to euro?

I really can't see Ireland leaving the euro.


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## Chris (20 Sep 2010)

Godfather said:


> Hi,
> 
> I'm getting more and more confused by 2 schools of economists:
> 1) the ones thinking that Ireland might have to ask for help to EU and IMF like Greece (the financial investors seem to bet on this as the cost of Ireland borrowing money keeps increasing as I type)
> ...



Option 1 would secure your deposits to some extent. It would all come down to whether the situation of the banks were to deteriorate and would require further funding, which may or may not be possible. But this would not be due directly to an EU/IMF bail out.
Option 2 would be disastrous for your savings. Ireland has to import an awful lot of products, some which just aren't produced here, and some that cannot be produced here. The second category is the most important which includes oil. The price of oil and petrol and diesel would go through the roof with a knock on effect on the entire economy which is immensely dependent on oil. This would send production costs of pretty much everything up. 

Here is a report on what the ECB think of possibilities of leaving or expulsion from Euro: http://www.ecb.int/pub/pdf/scplps/ecblwp10.pdf


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## Godfather (20 Sep 2010)

Chris said:


> Here is a report on what the ECB think of possibilities of leaving or expulsion from Euro: http://www.ecb.int/pub/pdf/scplps/ecblwp10.pdf



Thank you very much Chris, the document seems quite reassuring.  

I previously googled "Ireland Euro" and got shocked by these alarming old articles: 
http://www.independent.ie/business/...and-may-exit-euro-region-in-2010-1972016.html

http://www.finfacts.ie/irishfinancenews/article_1019087.shtml

[broken link removed]

But I will work on thinking positive thanks to Aristotle's and Chris' replies. Thank you very much!


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## Chris (21 Sep 2010)

Godfather said:


> Thank you very much Chris, the document seems quite reassuring.
> 
> I previously googled "Ireland Euro" and got shocked by these alarming old articles:
> http://www.independent.ie/business/...and-may-exit-euro-region-in-2010-1972016.html
> ...



Just to clarify, I am not in the camp that believes everything is fine with the Euro and Ireland's membership of it.
I strongly suggest that you look up more articles that have an opposing view to the ECB report. The report is extremely biased, and the ECB would never come out and say that expulsion from the Euro were an option. I believe that voluntarily leaving is probably more likely than an expulsion. But either way I don't think the government guarantee of deposits is worth the paper it is written on and that desparate politicians are guaranteed to do desperate and extremely stupid things. The important thing is to look at both sides of the argument and take precautionary measures.


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## aristotle (21 Sep 2010)

Chris said:


> The important thing is to look at both sides of the argument and take precautionary measures.


 
What kind of precautionary measures?


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## Godfather (21 Sep 2010)

Chris said:


> [...] I don't think the government guarantee of deposits is worth the paper it is written on and that desparate politicians are guaranteed to do desperate and extremely stupid things.



Oh dear...  I'm getting a panic attack now!



Chris said:


> The important thing is to look at both sides of the argument and take precautionary measures.



Would you be able to pls share here any suggestion on "precautionary measures"? 

I can share with you mine: at the moment my savings are split among non-irish banks (sorry! too panicky!) like rabo, nib, nationwide UK, NR.


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## Chris (22 Sep 2010)

aristotle said:


> What kind of precautionary measures?





Godfather said:


> Would you be able to pls share here any suggestion on "precautionary measures"?
> 
> I can share with you mine: at the moment my savings are split among non-irish banks (sorry! too panicky!) like rabo, nib, nationwide UK, NR.



There have been a couple of threads about this, but here are some things I have done (NB these are not recommendations for you but should give you an idea as to what you could research):
1) most of my cash is physically abroad
2) all of my cash within Ireland is in foreign banks
3) all my equity holdings are abroad
4) not all of my cash is in €, I have diversified into harder currencies and precious metals

Please beware that interest earned on cash held abroad is liable to income tax, not DIRT, but my motivation for keeping cash abroad is wealth creation but preservation. These might seem like quite drastic measures and the scenario I am preparing for may well never happen. But I just don't trust politicians in desperate situations and by that I mean all politicians.


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## Godfather (22 Sep 2010)

Thank you very much Chris!


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## Bcommercial (22 Sep 2010)

1) Your strategy here seems sound Chris, but just how exactly do you get your cash "physically abroad"? I've been trying to find out about opening non-resident euro accounts abroad, maybe in Germany perhaps, but it appears impossible if you don't live there.

2) Your cash is indeed safer with the better rated foreign banks operating within Ireland than with the domestic ones. And even if the 100K deposit guarantee were to be fully honoured in the event of a bank bust (and of course if things deteriorate far enough this can never be 100% guaranteed), it's still preferable not to have to go down this route in the first place, and higher rated foreign banks minimize this risk. 
However, with foreign banks operating in Ireland your cash is not secure from Mr Lenihan's clutches in the (however unlikely) event of a euro exit and devaluation? Surely all Rabo, NR, NW(uk) etc accounts would all be converted to new Irish Punts & devalued? ...but hence your strategy of minimizing your Irish cash deposits I suppose!

3) Regarding equities, as Manuel of Fawlty Towers would say " I know nothing" 

4) Just how does one "diversify into harder currencies and precious metals"?  I realize that we all have to spend time doing our own researching , but there's just so much to learn about in such a short time, a real "crash" course if you'll pardon the pun  and any tips are always welcome. 

To conclude, the upcoming budget looms and I would fear further inroads into peoples savings by the government as they become evermore desperate to save their own hides. So, my priority would first be to get my savings physically into foreign banks in euro outside the  country, and any advice as to how to do this  and which banks/countries etc would be much appreciated.


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## Godfather (22 Sep 2010)

Bcommercial said:


> 1) Your strategy here seems sound Chris, but just how exactly do you get your cash "physically abroad"? I've been trying to find out about opening non-resident euro accounts abroad, maybe in Germany perhaps, but it appears impossible if you don't live there.



I agree, for example i'm italian and the banks there seem to be able to open an account to me because I have italian passport (I'm enquirying on this still though). Chris/anyone else could share their experience with accounts abroad with foreign banks?



Bcommercial said:


> 2) Your cash is indeed safer with the better rated foreign banks  operating within Ireland than with the domestic ones. And even if the  100K deposit guarantee were to be fully honoured in the event of a bank  bust (and of course if things deteriorate far enough this can never be  100% guaranteed), it's still preferable not to have to go down this  route in the first place, and higher rated foreign banks minimize this  risk. However, with foreign banks operating in Ireland your cash is not secure  from Mr Lenihan's clutches in the (however unlikely) event of a euro  exit and devaluation? Surely all Rabo, NR, NW(uk) etc accounts would all  be converted to new Irish Punts & devalued? ...but hence your  strategy of minimizing your Irish cash deposits I suppose!



+1



Bcommercial said:


> 4) Just how does one "diversify into harder currencies and precious  metals"?  I realize that we all have to spend time doing our own  researching , but there's just so much to learn about in such a short  time, a real "crash" course if you'll pardon the pun  and any tips  are always welcome.



Yes pls, I would like some tips as well...


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## maturin (23 Sep 2010)

> 1) Your strategy here seems sound Chris, but just how exactly do you get your cash "physically abroad"? I've been trying to find out about opening non-resident euro accounts abroad, maybe in Germany perhaps, but it appears impossible if you don't live there.



I'm sure there are lots of options. One example is to open an account with Keytrade bank in Belgium (www.keytradebank.com). Keytrade are a subsidiary of Credit Agricole and provide a stockbroking service as well as banking. Search the forums for more details.

I have no connection with Keytrade other than as a customer.


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## Bcommercial (23 Sep 2010)

Thanks maturin ...nice one!


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## monagt (23 Sep 2010)

*Foreign Banks*

Chris, How did you open the accounts, do you have addresses abroad?

Maturin, Belgian banking may not be safe either.


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## maturin (23 Sep 2010)

> Maturin, Belgian banking may not be safe either.



I agree. Caveat emptor.


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## Godfather (23 Sep 2010)

maturin said:


> I agree. Caveat emptor.



Does anyone know how much is the belgian deposit guarantee and if this bank is covered by it pls? Thank you


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## Happy Girl (23 Sep 2010)

Godfather said:


> Does anyone know how much is the belgian deposit guarantee and if this bank is covered by it pls? Thank you


 [broken link removed]


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## monagt (23 Sep 2010)

Keytrade online

1 - Complete the form online
You will need your identity card to fill in the form.

What is the Id Card?


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## Happy Girl (24 Sep 2010)

I just completed application online last week and received copy of it yesterday in post to sign and return to them together with photocopy of passport & utility bill.

Belgian banks may not be safer but I certainly have a lot more confidence in the Belgian government deposit guarantee scheme than I do in the Irish one.


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## Godfather (24 Sep 2010)

Happy Girl said:


> Belgian banks may not be safer but I certainly have a lot more confidence in the Belgian government deposit guarantee scheme than I do in the Irish one.



+1

Sorry it looks like italian banks look for italian passports... I'll let you know if can see anything different.


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## Happy Girl (24 Sep 2010)

Other than Keytrade, has anybody successfully opened a non-resident bank account in another EU country? I am weary eyed googling EU banks at this stage & keep coming up against brick walls. No French bank appears to have an English webpage that facilitates opening a non resident acc, Switzerland is a no-go as it does not permit non resident accs, Northern Rock wont permit me openin acc in Britain once they have a presence in Ireland already & I dont want 2open acc with them in Ireland. Any help much appreciated.


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## Godfather (24 Sep 2010)

Happy Girl said:


> Other than Keytrade, has anybody successfully opened a non-resident bank account in another EU country? I am weary eyed googling EU banks at this stage & keep coming up against brick walls. No French bank appears to have an English webpage that facilitates opening a non resident acc, Switzerland is a no-go as it does not permit non resident accs, Northern Rock wont permit me openin acc in Britain once they have a presence in Ireland already & I dont want 2open acc with them in Ireland. Any help much appreciated.



I'm in contact with some italian banks. I'll let you know as soon as I've more clarity (I have italian passport, I need to check if it's a "must" to open a non-resident account)


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## Godfather (27 Sep 2010)

Happy Girl said:


> Other than Keytrade, has anybody successfully opened a non-resident bank account in another EU country? I am weary eyed googling EU banks at this stage & keep coming up against brick walls. No French bank appears to have an English webpage that facilitates opening a non resident acc, Switzerland is a no-go as it does not permit non resident accs, Northern Rock wont permit me openin acc in Britain once they have a presence in Ireland already & I dont want 2open acc with them in Ireland. Any help much appreciated.


 
Hi, I've enquired to the 2 major italian banks on the phone:
1) unicredit
It looks like it's not so easy (maybe not possible?) to register a non-italian non-resident. You might have better luck by calling into one of the major branches in Italy (Milan or Rome for example) and ask them if it's possible:
?
"Dove" means "where" and you can put Roma (=Rome) or Milano (=Milan) for example and try to call them.
Pls note: any account has to be opened at the branch by signing lots of papers
2) intesa san paolo-imi

To find a branch you need to click on "filiali" and then "per indirizzo" and put the italian city in the "localita'" field.
I heard from a friend it's easier to open an account there. You need to explain your situation, that you've got irish passport and you've got the irish version of "codice fiscale" (translation of PPS Number in Italy), any account has to be opened at a branch by signing lots of papers as well (you might be requested for proofs of address, payslips, etc).

But in any of the 2 cases FIRST you need to agree with an english speaking agent if opening a non-resident account is possible and then agree time and branch where to meet. DO NOT book your flights without having having agreed on the possibility to open a non-resident account by explaining your situation and pls remember if you have a positive answer to agree on which original documentation to bring with you!!!

Best of luck, these 2 banks are covered by the italian deposit protection scheme for up to around 102K Eur per institute.
I hope this helps. I'm sorry this might seem vague but different branches seem to handle stuff differently...


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## tom3 (27 Sep 2010)

We have opened an account with barcleys in france, this bank def has an english webpage.


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## Happy Girl (27 Sep 2010)

tom3 said:


> We have opened an account with barcleys in france, this bank def has an english webpage.


 
Have gone onto Barclays.fr but cannot locate application form or how to go about opening an account. Also cannot find deposit interest rates either.


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## Happy Girl (28 Sep 2010)

Emailed Barclays France and got the following reply. It would appear that you can only open a current account with them. Not completely sure exactly what the first sentence means however it is irrelevant to me as it is a deposit account I am looking to open.

_*"I am pleased to inform you that the sum of credit transactions recorded on the current account should exceed 3000 euros per month for an individual account or 6000 euros per month for a joint account. Our only account is called Premier Life and it is fee-free. You cannot open a savings account on its own."*_


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## Godfather (29 Sep 2010)

Hi, does anyone know if the Irish Government can put hands on our new non-resident accounts in the EU?  Sorry but my paranoia is growing... 

In theory they can but only if we have problems with the law (for example tax evasion, etc). In that case believe despite my nickname I'm safe...


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## Chris (29 Sep 2010)

Godfather said:


> Hi, does anyone know if the Irish Government can put hands on our new non-resident accounts in the EU?  Sorry but my paranoia is growing...
> 
> In theory they can but only if we have problems with the law (for example tax evasion, etc). In that case believe despite my nickname I'm safe...



Here is something the government could do. Let's say they introduced a wealth tax on savings (e.g. they confiscate 10% of your savings, rather than your interest earned). Now they find out you have money in France. They would not be able to force the French bank to freeze the assets due without cooperation of the France state, which I believe is highly unlikely unless the money was used for serious crimes. But, they could still threaten you with fines and even jail if you did not cooperate, which I think is more likely. If it came to that though, I would seriously consider following my assets.


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## Godfather (29 Sep 2010)

Chris said:


> But, they could still threaten you with fines and even jail if you did not cooperate, which I think is more likely. If it came to that though, I would seriously consider following my assets.


 
Thank you Chris, I agree I would follow my assets in that case.  I remember the italian government suddendly imposed a tax of around 0.2% on every deposit in Italy a few years ago. I find 10% highly unlikely as it would force even more finance out of the country though


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## aristotle (29 Sep 2010)

There is little or no chance of a wealth tax like that I would say. Pyschologically its a step too far to take savings that people have worked hard for. Taking it via more taxes is somewhat easier to accept.


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## shnaek (29 Sep 2010)

aristotle said:


> There is little or no chance of a wealth tax like that I would say. Pyschologically its a step too far to take savings that people have worked hard for. Taking it via more taxes is somewhat easier to accept.



One way or the other, the responsible will be forced to pay for the irresponsible - as is mostly the case with nations. The lesson for us all seems to be to behave recklessly, and you will be rewarded.


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## Protocol (29 Sep 2010)

aristotle said:


> There is little or no chance of a wealth tax like that I would say. Pyschologically its a step too far to take savings that people have worked hard for. Taking it via more taxes is somewhat easier to accept.


 
What about 1% of wealth above 1m?  How might that go down?


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## aristotle (29 Sep 2010)

Fine by me and everyone else who don't have 1m in the bank


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## Godfather (29 Sep 2010)

Yes, great proposal. 1% above 1M Euro pls, below nothing, maybe just a handshake


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## Chris (30 Sep 2010)

Godfather said:


> Thank you Chris, I agree I would follow my assets in that case.  I remember the italian government suddendly imposed a tax of around 0.2% on every deposit in Italy a few years ago. I find 10% highly unlikely as it would force even more finance out of the country though


I agree, the 10% was just a number pulled out of my head for the example.



aristotle said:


> There is little or no chance of a wealth tax like that I would say. Pyschologically its a step too far to take savings that people have worked hard for. Taking it via more taxes is somewhat easier to accept.


The chances are low, but I firmly believe that desparate politicians will always do desprate things, no matter how popular or unpopular.



Protocol said:


> What about 1% of wealth above 1m?  How might that go down?


Taxing those with large amounts of money is the last thing that should be done. What this country is lacking is investment in production. And those best able to provide that capital investment are the wealthy. Beleaguer the wealthy with taxes and wealth confiscation and the end result will be less investment.


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## Godfather (30 Sep 2010)

Chris said:


> The chances are low, but I firmly believe that desparate politicians will always do desprate things, no matter how popular or unpopular.



+1




Chris said:


> Taxing those with large amounts of money is the last thing that should be done. What this country is lacking is investment in production. And those best able to provide that capital investment are the wealthy. Beleaguer the wealthy with taxes and wealth confiscation and the end result will be less investment.



Do you mean "taxing ONLY those with large amounts of money" or would a desperate government only aim at the small savers? Hold on a second here. As John Maynard Keynes used to say the propension to the spending is higher in percentage for people with lower savings than people with higher savings... Thanks to him the progressive taxation on income was introduced.


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## galleryman (30 Sep 2010)

Chris said:


> Taxing those with large amounts of money is the last thing that should be done. What this country is lacking is investment in production. And those best able to provide that capital investment are the wealthy. Beleaguer the wealthy with taxes and wealth confiscation and the end result will be less investment.


 
That sounds like something someone with a large amount of money might say.


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