# Irish Depositors beware - Pat Kenny Show



## Palerider (21 Mar 2013)

I have just listened To Ciaran Lynch the Labour TD who is also Chair of the Oireachtas Finance committee being interviewed on the Pat Kenny radio show.

The conversation started with Kenny wanting to know how during Irelands Presidency of the E.U. that we acceded to the principal of making deductions to depositors in Cyprus and the possible impact of contagion as a result of this. 

Deputy Lynch put forward his views that application of a levy on depositors was appropriate, the more the depositor had the greater he argued the ' levy ' should be. Pat Kenny drilled him hard that this was effectively theft and Deputy Lynch dodged many times but failed to discuss the principals involved however Kenny did want to talk about the principals involved and the fact that this Govt has applied a levy on pensions already which was effectively a theft and theft was his word not mine and not denied or challenged by Deputy Lynch. 

Whilst the conversation started out about Cyprus it evolved quickly into what this T.D's view was about making depositors pay up by imposition of a levy. The conversation was removed from talk about Cyprus at that point. Remember this guy is a member of Government, his view which is reasonable I think to say the Labour party view was crystal clear and frightening to me as a depositor that has spread my life savings across the Banks and thereby thinking I could rely on the €100k blanket guarantee.

This is at odds with what was declared by Deputy Coveney in the Dail yesterday.

I have held my deposits in Ireland when many suggested moving these overseas. I have seen what I thought was a lot of scare mongering on AAM about this topic. After hearing this interview I am now scared and need to review, I am now gambling and I am no gambler. Deputy Coveney says it will never happen, Deputy Lynch who is Chair of the Finance Committee agrees with it as a strategy.........did anybody else catch it or could it be listened to again on a Playback...


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## T McGibney (21 Mar 2013)

You are not alone

From Twitter this morning:


> *Jill Kerby*             ‏@*JillKerby*  34m #*TodayPK* Here, the like of *Ciaran Lynch* *TD* defends the coercive power of state to steal savings/property of anyone HE thinks should pay more


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## wbbs (21 Mar 2013)

I was listening to that too, frightening stuff.


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## Woodie (21 Mar 2013)

It can only be considered as theft or be honest and say it is a tax.   Whilst the institutions of state and EU are saying it is akin to requisition under the guise of emergency but with no guarantee of restitution once the emergency is over it can only be theft or tax.  
I am a modest mannered person but what I hear in the last days and again this morning is making me reconsider whether we are being lead on a EU wide basis by self serving hypocrites who are just making it up as they go along.


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## DerKaiser (21 Mar 2013)

wbbs said:


> I was listening to that too, frightening stuff.


 
The most frightening part is the continued naivety of labour in government. Large numbers of their back benchers don't seem to understand that they are in government and continue make idealistic comments that they have no hope of delivering.

Labour got their asses well and truly whooped by Fine Gael on the issue of higher income tax on those above €100k in the December budget. Fine Gael and the labour front bench will come out stongly against the principle of levying depositors.

The major consequence of this will be either the inevitable loss by labour of half their seats in the next election. I think at this stage they would be better off splitting the party into a "New Labour" and a democratic left.


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## WaterWater (21 Mar 2013)

I cannot believe what I heard on the Pat Kenny show this morning. It appears that the €100k bank deposit guarantee is not guaranteed at all except when a bank becomes insolvent otherwise your deposits are fair game.
Both Labour and Fine Gael have supported the theft of money from depositors accounts in Cyprus.
The spokesman for Labour also thinks that it is fair game to take more money from people who have savings of €200k.


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## Dermot (21 Mar 2013)

Sinn Fein in opposition will be opposed to this "cypriot levy" but if they were in Government would see it as a fertile area to visit and it would not damage their vote. There would also be support for it in the part of the Labour Party that does not think they are in Government as well as from some of the Independents.


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## Madangan (21 Mar 2013)

Well I have a very small private pension pot. I am a very long way from retiring but a few years ago had to cease payments into my pensions  due to recession etc...

Mypension pot is subject to a levy as has everyone elses for last few years. What is the difference between this and my tiny deposit in my Bank?

Were the Cypriots not really just levying a different type of savings..i.e money saved in a Bank instead of money saved in a Pension?

I object to both but I genuinely would like to know what the difference is as both involve the Government reaching in and taking what I have saved, not interest on it but the actual capital, not a gain but the principal.

So what is the actual difference?


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## DerKaiser (21 Mar 2013)

Madangan said:


> My pension pot is subject to a levy as has everyone elses for last few years. What is the difference between this and my tiny deposit in my Bank?
> 
> Were the Cypriots not really just levying a different type of savings..i.e money saved in a Bank instead of money saved in a Pension?
> 
> ...


 
The difference is that a large portion of the charges you have paid to your pension provider are related to the stringent solvency and regulations imposed on pension providers. In effect, you have paid for the security of your investment.

The person with the deposit, on the other hand, has placed their money in a more reckless organisation.

I would never suggest that anyone depositing money in a bank should be burnt as there is a social expecation that banks will be regulated appropriately. By extension, it is an absolute farce that the person in the pension fund who actually has invested in an organisation that is appropriately regulated is required to pay a levy.


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## Bonaparte (21 Mar 2013)

don't forget that individual pension pots have been dipped into by the current Government which is maybe even more dangerous than levying deposits


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## Harry31 (21 Mar 2013)

Can I ask a question about the Cypriot bank deposits, were these already subject to the equivalent of DIRT tax?


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## theoneill (21 Mar 2013)

Just listened to this - I am in shock.


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## Palerider (21 Mar 2013)

Would it be fair to conclude following the interview this morning that one should now withdraw deposits from this country, what Deputy Lynch stated will certainly frighten off the larger corporate depositors for sure, it is well known that some large corporates ( CRH has been mentioned in this space ) move their funds out each Friday and back each Monday, point being if it is going to happen then it will happen when the Banks are closed.

This isn't about which political party you favour, it is about theft, we all know our pensions have been dipped into. After what I heard this morning I really believe this attack on small or large depositors will become a reality for deposit holders here in Ireland despite what Minister Coveney stated in the Dail yesterday, i.e. -  that this would never happen.

We are being softened up and lied to, you'd imagine the Govt partners could stay on the same page at least but no they cannot. If it happens I for one will not be sitting quietly by.

I would urge all to listen to that piece and after listening come back here and give your opinion if you are not too livid that is.   

Is it now time to ringfence whatever deposits individuals possess and secure them elsewhere..? We could do nothing about the pension thefts but we can about this...if we act on what we hear and do not behave like sheep.. thoughts after listening to the piece please..?


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## Palerider (21 Mar 2013)

Here is the link but if it does not work go to the RTE radio site and follow the RTE One link to the Pat Kenny show, it is there ! 


http://www.rte.ie/radio/radioplayer/rteradiowebpage.html#rii=9%3A20174941%3A133%3A21%2D03%2D2013%3A&type=radio


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## dub_nerd (21 Mar 2013)

I genuinely can't understand why people are so shocked. I can only put it down to people not appreciating what a financial train wreck this country was in 2008, and continues to be today. Whatever you think about making the bondholders whole (and I have grave reservations myself), without external help every bank in this country would have closed its doors, never to open again. Every depositor would have lost every cent.

The banks are still on life support. In time they may eventually trade their way out of difficulty. They may or may not need further support. (In my opinion they will). Bank savings are at risk, there is no two ways about it. If you think otherwise you are deluded. The good returns paid to depositors up to last year were reflective of that risk.

If you had savings in Ireland since 2008 and suffer a 10% haircut in future, you are still showing a healthy profit. To me it's a risk I'd prefer not to take, but can live with. Most other options come with their own risk. Other people must make their own risk analysis. But please don't act shocked that your savings are at risk. We are living through an unprecedented financial catastrophe. What on earth were you expecting???


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## Kev (21 Mar 2013)

it appears that the government is waiting for some other country to raid people account then they will followed. They do not want to be the first country to do the raiding of people accounts first, it is far easier to wait and say Cyprus has done it therefore what is so wrong with Ireland doing it.


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## dub_nerd (21 Mar 2013)

I would discount everything uttered by politicians. They are playing a confidence game. It's not that they're lying but it's their _job_ to tell you everything will be ok. To take them at their word would be like mistaking a financial products salesperson for a financial advisor. Simon Coveney or Ciaran Lynch can't tell you what's going to happen. How would they know? In the interview with PK, you could almost hear what Ciaran Lynch wanted to say, but couldn't. "Ah c'mon Pat, Cyprus is crocked -- how else were they going to pay". That, of course is an admission that desperate times call for desperate measures, and if our own situation gets desperate enough we'll have to employ the same desperate measures. But that's the truth of it.


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## Gervan (21 Mar 2013)

> every bank in this country would have closed its doors, never to open again. Every depositor would have lost every cent.



dub nerd, I dispute this. I was well aware of the previous guarantee covering 90% of €20,000 and had so arranged my funds as to have lost the minimum. If the banks had closed, I would not have lost "every cent", only 10%.


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## oldnick (21 Mar 2013)

I share Dubnerd's surprise at other posters' surprise.

Surely nobody believes that one's assets are regarded by governments as inviolate? Especially by left-wing/socialist parties some of whom have quite openly stated that there should be a wealth tax.
A property tax -every year - is a "theft" as much as any once-off tax on one's bank account. 

I don't agree with it. Whether it's called  property tax or assets tax or wealth tax, I think income tax and reasonable sales-tax(vat) should be enough , and that one should not be penalised for putting one's money into bricks or into a bank.

But,sadly, governments across the world are doing it -and  Pat Kenny's surprise that it was attempted in Cyprus surprises me. The bank guarantee is against the failure of the bank. It obviously does not mean that the government can't take that money, as infuriating as that may be.


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## dub_nerd (21 Mar 2013)

Gervan said:


> dub nerd, I dispute this. I was well aware of the previous guarantee covering 90% of €20,000 and had so arranged my funds as to have lost the minimum. If the banks had closed, I would not have lost "every cent", only 10%.


 
You're not getting it. Who do you imagine was in a position to pay your money back?


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## Jim2007 (21 Mar 2013)

Gervan said:


> dub nerd, I dispute this. I was well aware of the previous guarantee covering 90% of €20,000 and had so arranged my funds as to have lost the minimum. If the banks had closed, I would not have lost "every cent", only 10%.



If a bank went down you have a fair chance that you get back 90% of your deposit.  If all the banks closed, it's it anyone's guess how much if anything you'd get back!  There simply would not be enough funds to go around.


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## Jim2007 (21 Mar 2013)

Palerider said:


> I
> I have held my deposits in Ireland when many suggested moving these overseas. I have seen what I thought was a lot of scare mongering on AAM about this topic. After hearing this interview I am now scared and need to review, I am now gambling and I am no gambler. Deputy Coveney says it will never happen, Deputy Lynch who is Chair of the Finance Committee agrees with it as a strategy.........did anybody else catch it or could it be listened to again on a Playback...



You were always gambling, you just never bothered to take the time to understand the risk you were taking!  Every single financial product from a simple deposit account to a derivative carries risk with it, so it is up to you to make sure you understand those risk before you pump your cash into it.

I've seen several people on this forum happily moving cash out of Ireland in to German banks 'cause it's save there!   Yet they fail to understand that the banks they are placing their funds in carry a far higher level of risk than an of the Irish banks.

I've read of people suggesting that Switzerland is safe and yet if they took the time to investigate it they would discover that if balloon went up they would get very little back because we cap the payouts at 9b per bank (9b is chump change for most Swiss banks)  and furthermore we have a long history of letting banks go to the wall!

There is no such thing as a risk free option.


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## Conan (21 Mar 2013)

Taxes, charges, levies, USC, PRSI, DIRT etc etc. Show me one taxpayer who wants to pay more. The only consolation with Ciaran Lynch's remarks is that they are made by a Labour TD. It's not as if they are in power (only in Government). I would be more worried if a FG Minister said it.
It is ironic (if not laughable) to hear SF criticising the Cyprus levy, unless they are concerned about their Russian friends losing some money or have SF lodged their Northern Bank deposits in Cyprus?


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## Palerider (21 Mar 2013)

Jim2007 said:


> You were always gambling, you just never bothered to take the time to understand the risk you were taking! Every single financial product from a simple deposit account to a derivative carries risk with it, so it is up to you to make sure you understand those risk before you pump your cash into it.
> 
> I've seen several people on this forum happily moving cash out of Ireland in to German banks 'cause it's save there! Yet they fail to understand that the banks they are placing their funds in carry a far higher level of risk than an of the Irish banks.
> 
> ...


 

Jim 2007 - This is completely off topic, have you listened to the piece..? my original post relates to our State dipping their hands into our deposit accounts.

For my part what has changed today and after Cyprus is that in sharp focus I am now clear the State will only step in if there is a Bank failure.

I for one never contemplated that a member of Government would come right out and say what he said today, listen to the piece, that is exactly what he advocated despite Pat Kennys charge at him.


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## Jim2007 (21 Mar 2013)

Palerider said:


> Jim 2007 - This is completely off topic, have you listened to the piece..? my original post relates to our State dipping their hands into our deposit accounts.
> 
> For my part what has changed today and after Cyprus is that in sharp focus I am now clear the State will only step in if there is a Bank failure.
> 
> I for one never contemplated that a member of Government would come right out and say what he said today, listen to the piece, that is exactly what he advocated despite Pat Kennys charge at him.



Every type of asset has been subject to levies, taxes etc. over the past 100 years, I don't see why you should be surprised!  Forget about the talking heads and seek out the hard facts and think for yourself.


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## roker (21 Mar 2013)

My Annuity is not guaranteed if the assurance company should fail.
 The Government has already authorised itself to dip into our bank accounts via the revenue if we do not pay the proprty tax


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## dewdrop (22 Mar 2013)

I always thought a guarantee comes into play only when the guaranteed party fails so i am wondering what all the fuss is about regarding this particular aspect of the discussion.


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## Bronte (22 Mar 2013)

I went to listen to the pod cast of this last evening and never got as far as the Ciaran Lynch bit.  Far more shocking is what went before in relation to debt and FLAC and New Beginnings.


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## ABME (22 Mar 2013)

This could be already answered somewhere else but cant seem to find anything similar...
In Cyprus...
What would happen if you had €60k in one account and say €50k in another?
Would they target you for 9.9% as you would be over the €100k? or the lower amount on both accounts?


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## kdoc (22 Mar 2013)

An enlightening piece of radio. Maybe the proposed PRSI on savings is not going to satisfy our political masters.


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## Palerider (22 Mar 2013)

Money held in State Savings and prize bonds are I am informed a first obligation of the Irish Government ( source - see below ). 

Given that DIRT has increased and PRSI is on the way on interest earned now seems a good time to get out of the traditional bank deposits and jump into State Savings vehicles, here is the incentive as I see it...If these are a first obligation then they are repayable in full and rank alongside Irish Government bonds, Irish Govt treasury bills and all financial products that form part of the national debt of Ireland, If a bank levy is introduced on deposits then only the bank depositors get that haircut.

Investments made before end of year should avoid PRSI ( speculating here ) 

Any views on this as a strategy apart from the obvious I wouldn't lend money to Ireland response given credit rating etc ...

Latest news is that Cyprus depositors with over €200k could be looking at a  25% haircut ( source RTE News )    

** Source - I have a  letter from the prize bond company dated January 2011 stating this when I asked how safe my investment in prize bonds was.


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## Jim2007 (22 Mar 2013)

Palerider said:


> If these are a first obligation then they are repayable in full and rank alongside Irish Government bonds, Irish Govt treasury bills and all financial products that form part of the national debt of Ireland, If a bank levy is introduced on deposits then only the bank depositors get that haircut.



They could be paid back in full if the government had the resources to do so, but  by definition when a country goes bankrupt it does not have the resources to do so... There are countless things government can do in a crisis to state borrowings, do some googling about what happen in the past.  

The only thing you can do with financial risk is diversify to reduce the risk.  Spread your money out over different products and leave it at that.


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## Madangan (22 Mar 2013)

Now when Granny kept her money under the mattress they said She was crazy! Turns out Crazy Granny may have been right


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## Jim2007 (22 Mar 2013)

Madangan said:


> Now when Granny kept her money under the mattress they said She was crazy! Turns out Crazy Granny may have been right



Well lets see:
- There is still devaluation or withdrawal of the currency (good way to take a bit of the savings as well)
- No income
- Inflation
- Theft


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## Luternau (22 Mar 2013)

Jim2007 said:


> Well lets see:
> - There is still devaluation or withdrawal of the currency (good way to take a bit of the savings as well)
> - No income
> - Inflation
> - Theft



Agh come on Jim, I lived in Switzerland for a number of years and I can still see a joke or sarcasim when I see it!

At least Granny knew the risks and could take some protections against it-but theft by the stoke of a pen-no one can take steps against that. Call it normal risk or tax-but when a Bank or Government messes up so badly on matters they are supposed to be expert at, that innocent depositors have to bail them out-thats theft. Cyprus, Ireland, it dont matter.

Even in Switzerland, doing that would draw peoples ire! I once seen a man loose it because a tram was late by a few mins-what would he do if his money was taken by the state to bail out UBS or Credit Suisse? At least in Switzerland, the people would probably get to vote on it-seeing as they vote on allowing minartes and other lesser imortant things.


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## Luternau (22 Mar 2013)

cashier said:


> What are minartes



An architectural feature of Islamic mosques!

Apologies, Mods, slightly off topic

And yes, Granny was not so stupid...


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## Pastorius (23 Mar 2013)

*Safety of Deposits*

I have to agree that listening to that interview with Ciaran Lynch on the Pat Kenny show was frightening. Its even more scary when you are a financial retard like myself.
Can anyone tell me is there any action a depositor can do to protect his or life savings?. I have my life savings 300K with Rabo Bank as I regard security more important than interest, but if the Irish government decided to take a similar action to the Cypriot government, security is not an issue. Also would state savings or gold be subject to such a raid?  Any advice would be greatly appreciated.

Regards Worried


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## dub_nerd (23 Mar 2013)

Pastorius said:


> Can anyone tell me is there any action a depositor can do to protect his or life savings?.


 
In short, no. Think about -- if you're an Irish government in the same boat as the one in Cyprus, your aim is to raise the money needed to fund the bailout. What are you going to do? Turn around and say "well, we had a great plan but those crafty depositors figured out a way to hide their funds from us"?

No, you are going to second guess any steps depositors might take and implement measures to defeat them. Put your money abroad? There's already laws requiring you to declare it. Government could just tell you that there is x% tax due on it. For anything you can think of (including State savings and gold), the government can find you out and tax you. They can even take your money _without_ taxing you -- by introducing a new currency and devaluing it. If the government wants your money, they will get it, unless you want to take a lot of other risks, _and_ become a criminal.

To be honest, I would just relax about it. Life is too short to be worrying about eventualities that are still fairly remote possibilities. If the worst comes to pass, there will be nothing you can do anyway, so all your worrying will be in vain. I would even say you might be too cautious -- I understand your going with Rabo (and I have partly done so myself) but up until a few months ago you were foregoing a lot of interest for what was only institutional risk ... for certain risks such as a euro exit or deposit tax, Rabo wouldn't be any safer than any other bank.


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## The Ghoul (23 Mar 2013)

Very good post, dub nerd. My thoughts would be similar. I understand the worry that the OP and others feel as I have had major worries myself but strangely this time, I'm not too worried. If the "burning" of Cypriot deposit holders is limited to those with more than the guaranteed amount then I'm not worried at all.

Worry and fear can result in irrationality. During one of the first Eurogeddon crises I was really bad and thought I was going to lose a lot of money. I was pretty close to withdrawing over 65k out of one of my accounts and buying a new BMW 530d with it, even test drove the car and was thinking of options and colours. The idea was that if the money was going to disappear into thin air I might as well treat myself to something nice with it before that happened. Thankfully I did not spalsh out as in the cold light of day the stupidity of this idea was apparent.

Some people have cost themselves a lot of money by spraying it around into "anything but the euro" and "anything but Irish banks/Ireland" without thinking things through or knowing what they're doing. Even some professionals have gotten things badly wrong and amateurs think they can do better? The likes of Jill Kerby and the media generally thrive on this hysteria and they are a factor in creating it. While people like Jill can sometimes call things correctly, at other times they're wrong. If I had followed some of Jill's predictions on gold, the euro/dollar exchange rate, gold, Swiss francs etc. I could well be down tens of thousands at this stage.


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## Godfather (23 Mar 2013)

Latest news: 20% tax on deposits above 100K Eur at Bank of Cyprus, 4% tax on same level of deposits at the other Banks in Cyprus. If that's the final agreement then some consistency in the deposit protection scheme is preserved...


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## WaterWater (24 Mar 2013)

The Ghoul said:


> Worry and fear can result in irrationality. During one of the first Eurogeddon crises I was really bad and thought I was going to lose a lot of money. I was pretty close to withdrawing over 65k out of one of my accounts and buying a new BMW 530d with it, even test drove the car and was thinking of options and colours. The idea was that if the money was going to disappear into thin air I might as well treat myself to something nice with it before that happened. Thankfully I did not spalsh out as in the cold light of day the stupidity of this idea was apparent.


 
Strange, but I am going to go down this route. However it will not be the BMW or something as frivolous. After a lifetime of being careful and somewhat frugal I am now going to have the Celtic Tiger moment that I didn't have when others were having theirs.
Bring on the decking, the new kitchen, the holidays, change of car, the daily Cappuccino with muffin, the restaurant visits, etc


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## kdoc (24 Mar 2013)

I suppose there'll be some making a beeline for Friedrich Strasse, Berlin, with their cash.


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## kdoc (24 Mar 2013)

The latest on Cyprus from Reuters via CNBC:
"A senior Cypriot official said Nicosia had agreed with its lenders on a 20 percent levy over and above 100,000 euros at the island's largest lender, Bank of Cyprus <BOC.CY>, and four percent on deposits above the same level at other troubled banks."

http://www.cnbc.com/id/100585070


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## Pastorius (25 Mar 2013)

*Ciaran Lynch on Pat Kenny Show*

I have to agree that listening to that interview with Ciaran Lynch on the Pat Kenny show was frightening. Its even more scary when you are a financial retard like myself.
Can anyone tell me is there any action a depositor can take to protect his or life savings?. I have my life savings 300K with Rabo Bank as I regard security more important than interest, but if the Irish government decided to take a similar action to the Cypriot government, security is not an issue. Also would state savings or gold be subject to such a raid?  Any advice would be greatly appreciated.

Regards Worried


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## kdoc (25 Mar 2013)

It seems now that deposits up to 100 thousand euro are safe in Cyprus - and probably in the rest of the Eurozone.  According to Michael Noonan they are definitely safe in Ireland. The NCA advise those with more than that amount to spread it around other financial institutions.


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## wbbs (25 Mar 2013)

I presume though there is nothing to stop the government deciding that it is 100k per person that is exempt from any new levy they might like to bring in to bail out the country.   I don't think the guarantee means an awful lot if that situation arises.


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## crabbybear (25 Mar 2013)

Hi, What about An post Savings certs (have all savings of 120k there) ? Would this be the same as bank deposits ?  If same applied as Cyprus - should I split this up ? Have a great rate as I got these about 6 months ago.

Please advise.
Thanks


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## Pastorius (25 Mar 2013)

*Ciaran Lynch on Pat Kenny Show*

I have to agree that listening to that interview with Ciaran Lynch on the Pat Kenny show was frightening. Its even more scary when you are a financial retard like myself.
Can anyone tell me is there any action a depositor can do to protect his or life savings?. I have my life savings 300K with Rabo Bank as I regard security more important than interest, but if the Irish government decided to take a similar action to the Cypriot government, security is not an issue. Also would state savings or gold be subject to such a raid?  Any advice would be greatly appreciated.

Regards Worried


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## North Star (27 Mar 2013)

Hi Pastorius,
For full disclosure; we are a firm of financial advisers with a high level of banking experience. We have been advising clients on this area of deposit security for the last 2 years. The developments in Cyprus in our view are a worrying precedent. Whilst the situation in Ireland is probably best described as stabilising, there is real political and economic instability in Italy and other E.U. states. Therefore in our view it is unwise to ignore the risks of a re-flare up in the Euro crisis.
There are a range of options open to both individuals and companies to protect their deposits. The options range from foreign  deposit accounts, Govt. Bonds in strong core Euro countries, Insurance wrapped investment products, which would have avoided the losses imposed on Cypriot bank accounts, real assest such as Gold property etc. It is a complex area and we can not provide the level of detail in this forum which you would require to make an informed decision.
We charge a fixed fee for working with a client to advise them of the risks and their options to protect against those risks. There are other well qualified advisers out there ( many of whom post on this site) who will be able to give well informed and independent advice. Our recommendation is to contact several advisers see what the cost for the service is and their experience or credentials in this area. They will help you understand the risks and your options and even if you decide to do nothing then at least you are making an informed decision. I think the events in Cyprus means that the responsibility is now on all of us to do our research/due diligence rather than relying on blanket guarantees. The fee or costs should be considered a small investment in securing your savings and financial security. Regards Vincent


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## galwegian44 (27 Mar 2013)

kdoc said:


> It seems now that deposits up to 100 thousand euro are safe in Cyprus - and probably in the rest of the Eurozone.  According to Michael Noonan they are definitely safe in Ireland. The NCA advise those with more than that amount to spread it around other financial institutions.



Kdoc - deposits in the Eurozone are safe up to the level that is dictated by Europe (not Michael Noonan) at which a haircut gives them the required amount they need (5.7B in Cyprus). They are making it up as they go along but actually dipping their fingers into depositors savings is a step I didn't think they would take. 

We do not have a deposit insurance scheme in Europe so the guarantee is worthless. Do your due diligence based on that premise and do not believe what the politicians are telling you.


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## Jim2007 (27 Mar 2013)

Out of interest has anyone considered the use of money market products as an alternative to deposits? 

A couple of advantages I see:
- It is not a deposit
- Since it is not a deposit, but a certificate of some type held by the bank on your behalf it does not form part of the assets on break up
- They are "near money", so they are easy to liquidate

A couple of disadvantages:
- no depositor guarantee
- a little more risky than a deposit

I've no idea about the tax situation...


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## North Star (27 Mar 2013)

Jim we looked at money market funds as an alternative but there as you suggest a couple of drawbacks i.e

Very low money market rates mean almost negligible returns before costs
In an a worst case scenario if depositors and senior bond holders are up for being hit, then there is a clear risk that interbank deposits may also be up for grab. If a money market fund used interbank deposits then this may open a potential of capital loss albeit in an extreme scenario.
We would consider using an insurance wrapper (life company) using a mix of corporate bond and absolute return funds and importantly with daily liquidity i.e you can get your cash back if needed,  a reasonable alternative. Clearly there is some element of investment risk in both the corporate bond and absolute return elements, this may improve or dis-improve investment returns, but this is in our view a reasonable proposal to get deposit beating returns, keep liquidity and stay as best we can away bank deposits which if events in Cyprus were to be repeated may be open to a Govt grab. Tax for the above is straightforward exit tax.


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