# Protection against government raiding deposits???



## inver (16 Jun 2011)

Hi,

With their tax on pension schemes introduced recently the government has paved the way to get their hands on peoples deposit accounts.

For Irish citizens what is the best way to protect against this? 

Can the govt. tap in for example to a sterling account set up in Barclays bank?

I presume they can hit Rabodirect, Nationwide UK given that they can currently apply DIRT to these??


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## Brendan Burgess (16 Jun 2011)

The government could seize deposits in banks operating in Ireland. This would include Rabobank, Nationwide UK, Northern Rock et. 

They probably could not seize a deposit in Barclays in London. 

They certainly could not seize a deposit in Switzerland. 

In the very unlikely event that they do something like this, they probably would impose a 10% levy on all deposits owned by Irish residents wherever those deposits are situated. So although you may have €100k in a Swiss bank account, you would be obliged to pay €10k to the Irish government.


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## Chris (16 Jun 2011)

Brendan Burgess said:


> The government could seize deposits in banks operating in Ireland. This would include Rabobank, Nationwide UK, Northern Rock et.
> 
> They probably could not seize a deposit in Barclays in London.
> 
> They certainly could not seize a deposit in Switzerland.


I was told a few years ago by someone I met on a plane who worked for a Swiss bank, that in general a state can only seize private assets from a foreign bank through a court order which would have to be based on a crime. As pretty much all countries see tax evasion as a crime, most banks will honour a foreign court order to seize assets because of a tax evasion case. However, in Switzerland tax evasion is not a crime, and therefore Swiss banks will not seize assets because of a tax evasion case. I don't have any links to back this up, but I also have no reason to believe the guy was making things up.



Brendan Burgess said:


> In the very unlikely event that they do something like this, they probably would impose a 10% levy on all deposits owned by Irish residents wherever those deposits are situated. So although you may have €100k in a Swiss bank account, you would be obliged to pay €10k to the Irish government.


But in that event you could leave the country to avoid paying the tax.


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## kdoc (16 Jun 2011)

That's a very good point Brendan. The risk is just the same for foreign banks based here as it is for Irish Banks. Now that we (i.e, the State), own the Irish banks, more or less, maybe depositors should think hard before putting their funds into foreign banks. 
Incidentally, some foreign based banks offer no service other than gathering deposits. And it seems to me that they came here to take advantage of the fear and loathing people had for the former Irish banking system.


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## inver (16 Jun 2011)

Brendan,

Do you really see a move to capture some of deposits as unlikely??
Personally I think its a certainty with 18 months.
Just seems to be very little can be done to protect against it if you are an Irish citizen.


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## monagt (16 Jun 2011)

If this was likely to happen, then any savings should be used to pay down mortgages???


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## Happy Girl (16 Jun 2011)

I am attaching a link to a previous query I posted. Indeed if anybody had any further suggestions to add to it, they would be much appreciated. We ourselves eventually plan to relocate to France hopefully in early retirement. But this is 10-15 years off yet and although we have not decided on exactly what part of france we would like to live in, I sometimes wonder should we just spend most of our savings we have in the banks and buy somewhere in france now while our euros are worth something.
http://www.askaboutmoney.com/showthread.php?t=147385


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## Codogly (16 Jun 2011)

Monagt ...i agree with you paying down the mortgage before any possible government levy or collapse of the euro is the best move , however how to know when to switch from savings to mortgage repayment is the trick...

I wonder would any bank consider a proposal from a mortgage holder to via a lumpsum payment to pre-buy a mortgage holiday ... ie you agree to pay 50k off you mortgage now on the agreement that if your circumstances changes ( lost Job) that you could call on that payment to buy you time years perhaps while you found a job or retrained.
I would have thought this would appeal to banks on a number of fronts :
1. Their overall exposure is reduced (they get the money now - rather than never)
2. If you have a low rate tracker then the early funds would reduce their losses on that loan.

From our point of view :
1. It reduces the risk associated with euro failure 
2. Protects your savings from the government swipe  


Any thoughts...???


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## L0llip0p (16 Jun 2011)

Hi codology,

To my knowledge that does exist somewhat with certain lenders. I'm with PTSB and you can overpay your mortage where the overpayment goes into a separate prepaid section.

So this prepaid balance doesnt get applied immediately to the mortgage balance but in fact builds up over time. Ultimately it can be used against the balance OR if you lose job/go on holiday etc, the mortgage balance can then consume from this prepaid amount.

Not sure if they let you lump a large sum once off into it though. You could be cheeky and overpay by like 2k a month for a period of time to build it up. That would probably work.


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## L0llip0p (16 Jun 2011)

The only scenario that wouldnt protect you from would the scenario of default and paddy seeing the punt again which would cripple your investment into your home.


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## Codogly (16 Jun 2011)

Surely if Ireland defaulted and returned to the Punt ...your average joe would be better off having a lower mortgage than having deposits switched from euro to punt ...or would your mortgage convert at the same rate as your savings...???

Example :  Day one of Ireland exit (OR KICKED OUT) of Euro :

Mortgage    200,000 euro = 400,000 Punt
Savings        50,000 euro = 100,000 Punt

Is this correct ...???

Also on the issue of Ireland being Kicked out of the Euro , what would happen in that case ... could Ireland simply turn around and say " if you are kicking us out then we're defaulting on all our debt ...we'll take our chances on the bond markets (which would probably lock us out).


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## L0llip0p (16 Jun 2011)

A devaluation wouldn't just mean a smaller mortgage becuase it would cripple the actual value of your home too.

Say your home is worth 200k now in resale terms.
And you owe 200k balance cos you bought its at 250k in 2008

So you sink 50K into it to reduce balance to 150k.
If you sold at 200k, you come out at 50k minus fees etc

But say default day comes in a months time....and result is 70% loss of euro to punt.

So your house is suddenly only worth 60k euros, your balance is 45k euros so even if you sold then.... 15k euros minus fees etc.

You'd certainly be better off sticking that 50k offshore in an account before lumping it into a mortgage and house valuation which be crippled by a default. Unless of course you never plan to sell ....ever....


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## Codogly (16 Jun 2011)

L0llip0p,

How did you calculate the 45k balance ...???

Surely you still owe 150k euro which would equate to ( assuming your suggested 70% fall) 500punt... regardless of the fall in value of your house...???


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## L0llip0p (16 Jun 2011)

In a default, our euros would be converted to punts directly.
So your 100k euro would become 100k punt rebadged with no conversion. You don't get richer, you become poorer.

With the punt trading weakly against the euro in that instance, thats where the value of your house and indeed the cost of your mortgage balance goes down. 

It wouldnt make sense that you continue to pay a mortgage balance of  150k euro where you can only sell the house in punts worth an equivalent  of 60k euro!

Everything would be "punted" so that would break the ECB tracker tie for  many mortgage holders which would means a smaller mortgage balance but  potentially much higher interest rates on those balances. 

This is why that 50k euros in the off-shore account would immediately become much more valuable because this wouldnt be at the mercy of a direct conversion to punt.

I dunno...I'm not trying to start an argument with you Codology  This was just my understanding of what would happen ....right or wrong as it may be


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## Jim2007 (16 Jun 2011)

Brendan Burgess said:


> The government could seize deposits in banks operating in Ireland. This would include Rabobank, Nationwide UK, Northern Rock et.



And what would be the legal basis for such an action??



Brendan Burgess said:


> They certainly could not seize a deposit in Switzerland.



WRONG!  If your first statement was held to be legal by an *Irish* court, then FINMA, the Swiss agency responsible for dealing with such requests would not only freeze the assets, they would provide assistance in identify the assets.  In fact based on recent cases, it is unlikely that they would even wait for a judicial review by a Swiss court before cooperating.

Jim (Switzerland)


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## pudds (16 Jun 2011)

I thought the rate being bandied about was 0.05% if it were to be as  high as 10% that would be really *savage *especially on anyone with meagre savings of 50k or less.

Is it likely there would be a minimum exclusion level.

How many billions would a 10% leavy bring in!


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## z107 (16 Jun 2011)

An obvious way to 'protect' deposits, is to spend them.

At least you will get some value from your money.


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## wbbs (16 Jun 2011)

Problem with spending them is my few bob have to last me until retirement and pension kicks in (if it is still there) as there is no prospect of getting a job in my line or any related area.   Have already lost the price of a new car on bank shares, can't afford to lose the price of another one.


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## z107 (16 Jun 2011)

> Problem with spending them is my few bob have to last me until retirement and pension kicks in (if it is still there) as there is no prospect of getting a job in my line or any related area. Have already lost the price of a new car on bank shares, can't afford to lose the price of another one.


I know where you're coming from.

I'm not necessarily suggesting that you go out and buy a load of crap. Instead spend it on stuff that has long term value. Consider what you'll buy in your retirement and see if you can spend money on it earlier. (eg, fuel - forestry)

Or buy stuff that's a better, safer store of wealth.


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## wbbs (16 Jun 2011)

Not sure what you are getting at, buy my own trees for chopping down?  

No one seems to have a solution as to where to put savings to keep them safe, it's frightening.   I thought when I lost my job that was bad, never thought trying to keep the redundancy money safe would be worse.


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## joe sod (16 Jun 2011)

*what about investments*

if deposits could be seized then surely investments which are fairly liquid could also be in danger, however when you think about it i dont think the government could really go down this road even in a doomsday scenario, severe cutbacks in public expenditure would actually be more acceptable even to public sector workers many of whom have substantial deposits, maybe a 10% levy on all liquid assets would be as far as it would go.


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## beffers (16 Jun 2011)

If the Irish govt do go after deposits over seas, how EXACTLY will they do that? How will they trace and track them? Will it be by your PPS number? Your Irish passport number or Irish drivers license that I presume you will have to produce to open a back account over seas? Will they make Irish banks disclose who how and where people transferred monies out of Ireland?

I have dual Irish and American citizenship. I have have savings accounts in both counties. I have a home in both countries. If I went up to the North and opened a non resident account in the Ulster Bank using all of my American info (American address, passport, drivers license etc etc) and then transferred the monies from my Irish savings account, how exactly could the Irish government come after me for their slice of my savings pie?

( Transferring the monies to the US is not an option btw, not if I want to keep on earning interest. Interest rates on savings accounts over there is next to nothing )


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## Codogly (17 Jun 2011)

L0llip0p,

No agrument from me ...just trying to understand the position ... surely if you owe 150k euro and ireland switches back to punts ...the bank would not work on a one for one exchange on that date , if the did they would take a massave loss because they borrowed euro on the international markets and must re-pay 150k euro...would they not be pushing the exchange loss onto the mortgage holder ...???

Any views ...am i wrong on this one ...hope so...???


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## monagt (17 Jun 2011)

*No one in their right mind would keep their money in a Greek or Irish bank right now*


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## kdoc (17 Jun 2011)

But the point monagt that Brendan made is your loot is no safer in Irish banks than it is in branches of foreign banks based here, or even in some banks abroad - should the Irish government decide to raid them. But it's very unlikely that they will.


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## Codogly (17 Jun 2011)

Safest place to put ones savings ...??? Opinions

1. Outside the Euro ( USD / STG / AUD / CAD / etc )
2. Deposited in one of the strong Euro countries (Germany)
3. Commodities (Gold / Oil / etc)
4. Lumpsum paid off Mortgage.
5. Spend it now on things you'll definately need in the future, that way its outside   the reach of Levys or currency risk.

Personally i'm leaning towards 4 & 5 above.


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## L0llip0p (17 Jun 2011)

Mr McWilliams likes to constantly draw comparisons with the current events and those in Argentina all those years ago. 
His summary of the events (as I recall) is that when Argentina did default, those who had moved their deposits and funds to the US did not have them seized whereas poor Diego and Cristina in Buenos Aires had their money frozen and devalued because they had their money in the local bank.

He never mentioned the Argentinian government going after deposits abroad. Indeed he points to the fact that those people who put their money abroad became richer (relatively speaking) and what happened next was that Argentina saw a greater influx of investment, job creation and growth based on these people returning their money to Argentina and using it to set up business etc etc.

I guess the question is....why are we so sure its possible for the Irish Government to go after our money abroad when Argentina didnt try this even though they were in dire straits and our lot can't even tackle their own public sector!! There isnt a precedent for this, is there?


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## L0llip0p (17 Jun 2011)

I'd be guessing a mix of 1,2,3 (eggs not all in one basket) would minimise your risk.

You and I can agree on nuttin eh Codology?


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## Codogly (17 Jun 2011)

Perhaps i'm to Risk Adverse...


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## DXB (18 Jun 2011)

If your mortgage is with KBC you can over pay a lump sum up to the value of your mortgage and get it back with 24 hours notice. I think other lenders have similar facilities..

of course, if you could time it correctly and put your euros into an off shore euro account and let your mortgage go into an punt nua then you would be sorted =D


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## serotoninsid (18 Jun 2011)

DXB said:


> If your mortgage is with KBC you can over pay a lump sum up to the value of your mortgage and get it back with 24 hours notice.


First I had heard of this.  Does anyone know what other banks will agree to this?

It would certainly make for a simple solution re. the short/medium term risk of deposits being raided....without having to commit funds towards mortgage permanently.


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## cremeegg (18 Jun 2011)

Thanks for that


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## dec1892 (20 Jun 2011)

The more I read about what options are out there with regards moving savings outside the country etc (and all the different difficulties that go with it with tax issues, access to it etc), the more I think maybe I should just withdraw my savings and keep it in cash…….maybe not under the mattress but somewhere in hard cash where I can physically keep an eye on it!!! Does this sound crazy or is it a serious option to consider??

However, in the worst case scenario of Ireland defaulting and reverting back to the punt nua, I presume my physical euros could not be touched by the government??


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## mmclo (20 Jun 2011)

At the moment the risk seems more to the very existence of the Euro than Ireland leaving it!


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## nediaaa (20 Jun 2011)

Is it more of an option to join the sterling rather than resort to the punt? we are the uks biggest trading partner and they have a lot to lose if we default. there was talk of it earlier in the year./ personally i would be in favour of this


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