# National Irish Bank now 100% guaranteed by the Danish government



## Brendan Burgess (6 Oct 2008)

Press release issued today:

*6th October, 2008  * 
This morning, National Irish Bank’s parent, Danske Bank Group, announced its participation in a State guarantee provided by the Danish Government.  National Irish Bank deposit customers will be covered by the new Danish agreement.  As part of the agreement, depositors and creditors with unsecured claims are fully covered by the State guarantee regardless of the amount. 

As a result, National Irish Bank is no longer seeking the opportunity to join the Irish Government’s scheme under the Credit Institutions (Financial Support) Act 2008.


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## Brendan Burgess (6 Oct 2008)

OK now. So which guarantee is better? The Irish government's or the Danish government's? 

Brendan


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## hatfield (6 Oct 2008)

Well to answer your question; since in our case the guarantee is 400 billion plus, we wouldnt be able to afford it anyway. Just think that the value of North Sea Oil to the Norweigans has been about 600 billion over the last 30 years and the sub prime package in the USA is costing 700 Billion and the USA cant even afford it given the size of the USA. 700 Billion is how much the Iraq war cost their economy. If we still had the Punt as our currency then our government could print as much money as it wanted and inflate its way out of debt; reducing the value of peoples' savings anyway therefore not protecting anything more than their symbolic value; so no amount would be too large if called in. However since we cant print Euros then God only knows what would happen. The gamble by governments is that noone will have to pay out for this.


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## ClubMan (6 Oct 2008)

Aren't both the _Irish _and _Danish _state finances rated _AAA_?


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## hatfield (6 Oct 2008)

ClubMan said:


> Aren't both the _Irish _and _Danish _state finances rated _AAA_?



Do you know what this means ?


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## z109 (6 Oct 2008)

As Hatfield says, since the Danish government could potentially afford to pay out on their guarantee, theirs is a more firm guarantee.


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## hatfield (6 Oct 2008)

yoganmahew said:


> As Hatfield says, since the Danish government could potentially afford to pay out on their guarantee, theirs is a more firm guarantee.



I'm not sure if either government would be able to pay.


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## ClubMan (6 Oct 2008)

hatfield said:


> Do you know what this means ?


http://en.wikipedia.org/wiki/Bond_credit_rating


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## hatfield (6 Oct 2008)

ClubMan said:


> http://en.wikipedia.org/wiki/Bond_credit_rating



I know you know how to use Wikipedia. Your problem is that given a question within a specific context, Wikipedia is often erroneous and often not the most authoritative or acceptable source. 
For example Wikipedia states 'Triple A = Credit risk almost zero' yet does not clarify what this means in terms of amounts of money and value. With a credit risk of 'almost zero' we could support and buy the whole world which shows how ridiculous that idea is.
Do you know what a credit rating really means ? Look up the credit rating of Enron (only one example) before it collapsed.


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## Duke of Marmalade (6 Oct 2008)

Prrovided the Danish guarantee does indeed apply to Irish euro depositors, it is in theory a more deliverable guarantee than the Irish one.  That is because Denmark is not in the euro and so can mostly print itself out of any domestic crisis.


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## Sunny (6 Oct 2008)

Duke of Marmalade said:


> Prrovided the Danish guarantee does indeed apply to Irish euro depositors, it is in theory a more deliverable guarantee than the Irish one. That is because Denmark is not in the euro and so can mostly print itself out of any domestic crisis.


 
In an absolute doomsday end of the world scenario, I think you are right. Denmark would prove to be a better guarantee but there is still absolutely no reason to suddenly start moving money from Irish banks to NIB!

Even though maybe NIB should send an e-mail to a few clients of Irish Banks (especially Irish Nationwide customers) pointing out that Denmark is perceived as less risky than Ireland!!


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## ClubMan (6 Oct 2008)

hatfield said:


> I know you know how to use Wikipedia. Your problem is that given a question within a specific context, Wikipedia is often erroneous and often not the most authoritative or acceptable source.


Most articles (including the one that I cited) also contain external links to further info which can be checked to sanity check and supplement the _Wikipedia _content. I never take _Wikipedia _as authoritative in all cases but it's generally a good starting point.


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## z109 (6 Oct 2008)

Hatfield, it might have been quicker if you'd said: "do you know how useless credit ratings from rating agencies are". 

For example, the rating agencies only downgraded Iceland's debt rating from AA to A+ after Glitnir bank had been nationalised last week. This despite the fact there'd been a run on the krona, CDS were huge for Icelandic banks, they had large external debt etc.


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## z109 (6 Oct 2008)

Duke of Marmalade said:


> Prrovided the Danish guarantee does indeed apply to Irish euro depositors, it is in theory a more deliverable guarantee than the Irish one.  That is because Denmark is not in the euro and so can mostly print itself out of any domestic crisis.


Er, if Denmark starts to print its way out, the krone will fall against the euro. This will make it far more difficult for Denmark to pay euro-denominated debts.


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## hatfield (6 Oct 2008)

yoganmahew said:


> Hatfield, it might have been quicker if you'd said: "do you know how useless credit ratings from rating agencies are".




but how else will ClubMan learn


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## Sunny (6 Oct 2008)

Well Iceland have just guaranteed all deposits. And people were wondering how Ireland and Denmark could afford it but this is in another League of wishful thinking


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