# Options if Ireland has to leave the euro



## LindaG (6 Dec 2010)

Thinking of opening an account in sterling with Ulster Bank. If euro collapses, anyone with savings is looking at huge devaluations. Any thoughts on moving savings into sterling, presume it shouldn't be too difficult, given that Ulster Bank, for example, is owned by Royal Bank of Scotland? 
It's unlikely any professional financial advisor is going to give any steers on this as advising small investors (like me) to get out of the euro could cause a (further) run on Irish banks so I'm thinking one has to read between the lines here. 
Any advice/suggestions/thoughts greatly appreciated.


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## maurice57 (8 Dec 2010)

As far as I understabd it, in the event of a split Euro, thg real questions are :

(1) What currency is an account denominated in ?
(2) What jurisdiction is the bank (where the account is) operating under ?

Take a Euro account with Rabodirect for example.  Rabodirect is regulated by the Dutch authorities.  If the Euro were to split, and the Netherlands ends up being one of the "strong" Euro countries, then I'd assume that Euros now in a Rabodirect account will become "strong" Euros.  It shouldn't matter where the account holder is domiciled.

The possibility is that if the Euro splits into "strong" and "weak" Euros, then the inevitable result will be a devaluation of the "weak" Euro.  Ireland would probably end up being a "weak" Euro country.  In that case, the "strong" Euros in the Rabodirect account could then be converted to a greater quantity of "weak" Euros when transferred from the Rabodirect account to, say, an AIB or BoI account.

It's highly unlikely that the "weak" Euro would ever rise above parity with the "strong" Euro, so leaving money in a non-Irish, "strong" Euro account would have to be a good thing.

Any comments ?

Maurice


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## Happy Girl (8 Dec 2010)

maurice57 said:


> As far as I understabd it, in the event of a split Euro, thg real questions are :
> 
> (1) What currency is an account denominated in ?
> (2) What jurisdiction is the bank (where the account is) operating under ?
> ...


 
So would holding a sterling account in Permanent TSB work on the same basis ie that if it we were forced to convert it into An Punt Nua that we would get a greater quantity of "weak" euros for our sterling.


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## Homer (26 Jan 2011)

maurice57 said:


> The possibility is that if the Euro splits into "strong" and "weak" Euros, then the inevitable result will be a devaluation of the "weak" Euro. Ireland would probably end up being a "weak" Euro country. In that case, the "strong" Euros in the Rabodirect account could then be converted to a greater quantity of "weak" Euros when transferred from the Rabodirect account to, say, an AIB or BoI account.


 
Does anyone know if Maurice's assumption is correct?  Is Rabodirect a branch or a subsidiary of the Dutch bank and would accounts with the Irish branch/subsidiary be regarded as denominated in Irish currency (which currently happens to be the euro) or in the euro itself (whatever that means these days).


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## Homer (26 Jan 2011)

Actually, I found a response (of sorts) to my question on the Rabodirect website.  Not very satisfactory.  Makes me think that I should investigate transferring the money I have with Rabo to an account directly with their head office.


Comment by Concerned Investor on 30/11/2010 01:11 

What happens to the funds in my Rabo bank saving account if the Irish Government re-introduces the Punt? (Do they remain as Euros or will Rabo convert them to Punts?)



Comment by RaboDirect Customer Care on 30/11/2010 01:50 



Hi Concerned Investor,

Thank you for your email. This is a highly unlikely scenario and you should note that there have been no actual steps taken to remove any of the weaker countries from the Euro. If this situation did arise it would depend on the legislation that would be adopted by the Irish Government to resolve the issue. Although we are licensed by the Dutch Central Bank we must comply fully with the codes of practice of the Central Bank of Ireland and with all relevant EU and Irish law.

So if new legislation is passed by the Government to affect all banks operating in Ireland, RaboDirect could potentially fall within the remit of that legislation. Again, this is speculation on the consequences of legislation which hasn't even been proposed, so it is hard to predict its effect.


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## dockingtrade (27 Jan 2011)

what would happen to investment funds where the base currency is eur? Ireland is one the main centres in the world for funds so what would happen to all the irish domicilled funds.


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## PetPal (16 May 2011)

*Best denomination if Euro were to collapse?*

I wanted to resurrect this post again, given that things have gradually deteriorated since that initial post.  I opened a sterling account with Ulster a couple of months back, when it looked as if things might turn bad very sharply.  Put half my savings into it.  Half still with Northern Rock (in Euro).  Are we any wiser now as to what would happen to the Euro in Northern Rock if (a) Ireland left the eurozone or (b) the euro collapsed?  The other question is, albeit that I have "safe" sterling, it is still in a bank in Dublin.  Should I really consider putting it in an English bank in the UK (where my husband has a bank account)?  I know that our deposits are supposed to be guaranteed up to 100k (which would well cover my savings), however I'm not sure that I would trust any guarantee at this stage of the proceedings.  Also (although this is a little OTT) do posters consider it likely that, if things got really really bad, the Government would freeze deposits, and thus nobody could get at their savings??  Has anybody any advice in this regard?  Any new perspective that I may have missed?  Thank you.


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## JoeB (16 May 2011)

Accounts can be denominated in any currency, but must be governed under some national law that's not Irish.

Rabo seem to comply with Irish law, (as above), and so they'd follow a lawful direction to garnish accounts. So if Gov.ie passes property confisaction laws then Rabo will follow them.

Ulster bank's T&Cs state 'non exclusive jurisdiction' of Northern Ireland, so I'd avoid them.

AIB GB seem to be governed, exclusively, under Northern Irish law. So they'd happily ignore directions made by Gov.ie. But are they bound by the Irish Central Bank?, and if so, is this a problem?

I'd prefer accounts that make no mention of Ireland, irish Regulators, or Irish central banks...


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