# Huge Increase in BoI 2 Year Term Rate - 4.50%



## Lightning (23 Mar 2011)

BoI are now paying an average rate of 4.50% on a 2 year term deposit. 

Year 1 - 3.00% AER. 
Year 2 - 6.00% AER. 
Average - 4.50%. 

Minimum: 20,000 EUR. 
Maxmium: 1,000,000 EUR. 

Source: Advert in today's Indo

BoI are clearly in dire need of deposits if they are now paying these rates.


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## Gervan (23 Mar 2011)

So should we be tempted or not?


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## Lightning (23 Mar 2011)

Gervan said:


> So should we be tempted or not?



If you are willing to lock your money in an Irish bank for the next 2 years, with the associated risks, then it is a great return for your money.


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## jmulcair (23 Mar 2011)

Thanks - just joined...looking at home for Tracker cash... Looked at your other listing...& this new one seems like a very good option...9% over two years...& option to get out after one year if needed...hard to beat? An Post is 10%, but 3-years not 2...& I think rates may be higher by then?


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## Chris (24 Mar 2011)

Gervan said:


> So should we be tempted or not?



I would say not. 4.5% interest to lend to an effectively bankrupt organisation is not a good deal.


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## Horatio (24 Mar 2011)

I'm coming home to Ireland in April for a holiday & fully intend to pull all my deposits out of all Irish institutions.

I simply won't risk it any longer than I must.


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## Black Rock (24 Mar 2011)

*Money is never "locked away" State Savings products are*

Money saved in any of the State Savings products is never "locked away". 

Irrespetive of the original term you can always ask for some or all of your money back at any time subhject to 7 days notice. There is no penalty or deduction whatsoever. 

see page 3 of NTMA brochure 1 at  www statesavings home page


*Can I have my money back at any time without*
*penalty?**
Yes, you can request some or all of your money back at any time subject to 7 days notice*.​ 
_There is no penalty or deduction whatsoever._​ 

You can request, at any time, full or part payment of your original amount (principal). This will be repaid to you with any interest or bonus payments that are due.​ 

_* State Savings™ products may be cashed in at any time subject to a 7 day notice period for withdrawal with the exception of_

_(a)_*Deposit Account Plus *_- a 30 day notice period before withdrawal_

_(b)_*Prize Bonds *_- no repayment until 3 months after purchase._​ 
*This early repayment option without penalty applies to all State Savings™ products.*​


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## onlyonpaper (24 Mar 2011)

Chris said:


> I would say not. 4.5% interest to lend to an effectively bankrupt organisation is not a good deal.


 
Does it make any difference which bank they are in if "something goes wrong". We are covered by the 100,000 euro guarantee. If the worst was to happen A) The govt was to raid deposits or B) Ireland was forced out of Euro,money in foreign owned banks registered in Ireland such as Rabo or NR., wouldnt deposits be affected in the same way as BoI or AIB


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## flatfish (25 Mar 2011)

Don't you think it would be nice to put your money in Aib and boi to help pay the redundancy to those who will be let go. After all remember how well these people looked after you over the years.


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## Chris (25 Mar 2011)

onlyonpaper said:


> Does it make any difference which bank they are in if "something goes wrong". We are covered by the 100,000 euro guarantee. If the worst was to happen A) The govt was to raid deposits or B) Ireland was forced out of Euro,money in foreign owned banks registered in Ireland such as Rabo or NR., wouldnt deposits be affected in the same way as BoI or AIB



Very good points, which is why I have very little money left in Ireland. I don't think the government would be able to stand up to even a €100,000 guarantee, and if deposits were confiscated or exchanged into a new currency then it is not certain what would happen with deposits on foreign owned banks within the country. There have been comments on other threads where people have asked Rabo to confirm what would happen in such a scenario, and they were unable to say for sure.


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## Lightning (25 Mar 2011)

onlyonpaper said:


> Does it make any difference which bank they are in if "something goes wrong". We are covered by the 100,000 euro guarantee. If the worst was to happen A) The govt was to raid deposits or B) Ireland was forced out of Euro,money in foreign owned banks registered in Ireland such as Rabo or NR., wouldnt deposits be affected in the same way as BoI or AIB


 
It does make a difference as to where you deposits are if the irish state or Irish banks default in the future.


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## Bigmc (25 Mar 2011)

> It does make a difference as to where you deposits are if the irish state or Irish banks default in the future.


 
Hi Ciaran, In what way does it make a difference or is it that deposits held in Ulster Bank, Rabo, Nationwide Uk are covered by the British Gurantee? 

Do you know if we are any safer holding our deposits in these foreign banks if Ireland was to leave the euro?

Thanks


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## Lightning (26 Mar 2011)

Bigmc said:


> Hi Ciaran, In what way does it make a difference or is it that deposits held in Ulster Bank, Rabo, Nationwide Uk are covered by the British Gurantee?



There are risks to deposits, in all banks operating in Ireland, if we leave the euro. 

The FSA/British guarantee is simply far more likely to be able to pay out compensation than the Irish state, making UK banks 'safer'.


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## mcriot29 (27 Mar 2011)

*will other banks raise there fixed rates like BOI*

do you see other  banks putting up rates in there fixed terms savings accounts


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## Lightning (27 Mar 2011)

mcriot29 said:


> do you see other  banks putting up rates in there fixed terms savings accounts



If ECB rates start increasing, then yes. Fixed term deposits were up to 6.5% AER before ECB started decreasing base rates. 

I would guess that PTSB & Ulster may start price matching or near price matching the fixed rate increases shortly. Investec will have to do something about their increasingly uncompetitive fixed term rates.


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## maccs (27 Mar 2011)

Ok!! Was just about to open up a 2 yr fixed deposit account with BoI for their new 4.5% rate, totally in 2 minds now!!!! Thinking maybe I should select a British bank then??

Anyone got any advice? Should I go for Ulster bank or Nationwide UK as opposed to BoI or EBS


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## Bigmc (27 Mar 2011)

For what its worth id go for the english owned banks, Ulster paying 3.5% for 12 month term & Nationwide uk payin 3.65% for 12 month term


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## Kev (28 Mar 2011)

Chris said:


> Very good points, which is why I have very little money left in Ireland. I don't think the government would be able to stand up to even a €100,000 guarantee, and if deposits were confiscated or exchanged into a new currency then it is not certain what would happen with deposits on foreign owned banks within the country. There have been comments on other threads where people have asked Rabo to confirm what would happen in such a scenario, and they were unable to say for sure.



If the currency was in sterling that would be good for savers as sterling is very strong at present.


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## farmerette (28 Mar 2011)

Kev said:


> If the currency was in sterling that would be good for savers as sterling is very strong at present.


 
sterling is very weak at present , the euro is very strong although it has slipped a bit in the last week thought not against sterling or the dollar


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## Kev (29 Mar 2011)

farmerette said:


> sterling is very weak at present , the euro is very strong although it has slipped a bit in the last week thought not against sterling or the dollar



Strling does not seem to be weak when you try to exchange the euro to it.


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## Chris (29 Mar 2011)

Kev said:


> Strling does not seem to be weak when you try to exchange the euro to it.



Sterling is strong when compared to early 2009, but it is very weak when comparing more historically up to 2007. Sterling is a weaker currency than the euro.


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## farmerette (29 Mar 2011)

Kev said:


> Strling does not seem to be weak when you try to exchange the euro to it.


 
the euro is worth over 88 pence sterling right now , less than five  years ago , it was closer to 70 pence


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## ardmacha (29 Mar 2011)

By way of comparison IR£1 is now £1.12. 

There has to be a question about Sterling going down, although some of that decline is already taking place.


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## CashMoney (30 Mar 2011)

This is a very tempting offer but I'm wary about putting my life savings into it.

What do you think are the chances of the banks going bust in the next 2 years and the government not being able to pick up the tab? If you had to put a percentage on it? 1% chance? 10%? 90% chance


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## Chris (30 Mar 2011)

CashMoney said:


> This is a very tempting offer but I'm wary about putting my life savings into it.
> 
> What do you think are the chances of the banks going bust in the next 2 years and the government not being able to pick up the tab? If you had to put a percentage on it? 1% chance? 10%? 90% chance



The banks are already bust, the question is whether the state will follow suit and what the likelihood of that is. In my opinion it is very high and only increasing.


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## marksa (30 Mar 2011)

Doesn't this rate smack of desperation? Why pay such a huge amount over swap rates, and way more than the competition. It almost makes one wonder about BoI's funding base and liquidity position to be putting out offers like this. And if you are looking at 2 year returns where you are exposed to Irish government risk, why not buy 2 year government bonds where the yield is around 9%?


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## Lightning (30 Mar 2011)

Chris said:


> The banks are already bust, the question is whether the state will follow suit and what the likelihood of that is. In my opinion it is very high and only increasing.



Yes. 

75.52% chance of default inside the next 5 years. 
91.35% chance of default inside the next 10 years.

The Economist this week called a default "inevitable".



marksa said:


> Doesn't this rate smack of desperation? Why pay such a huge amount over swap rates, and way more than the competition. It almost makes one wonder about BoI's funding base and liquidity position to be putting out offers like this. And if you are looking at 2 year returns where you are exposed to Irish government risk, why not buy 2 year government bonds where the yield is around 9%?



Totally agree. 

It's a very high rate due to IMF pressure for a 122% loans to deposits ratio, pressure from the ECB to decrease the huge emergency liquidity and desperation for deposits.


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## BOXtheFOX (31 Mar 2011)

Yes, but do you want to be the fool putting your hard earned in the front door while all the smart boys are taking theirs out the back door.


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## Joe Nonety (5 Apr 2011)

After DIRT the rate for BOI is 3.285% per year. The An Post savings bonds for 3 years is tax-free and pays 3.23% per year.
There is currently a €100,000 guarantee by the Irish government. After that you've a lot of pseudo-economists claiming that UK and European banks would be a safer option without anything to back those statements up.


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## Lightning (5 Apr 2011)

Joe Nonety said:


> There is currently a €100,000 guarantee by the Irish government. After that you've a lot of pseudo-economists claiming that UK and European banks would be a safer option without anything to back those statements up.



The guarantee for a term deposit is 100% of the amount regardless of the figure (under or over 100K) if the term deposit is opened before June 30th 2011. The Irish government has guaranteed all assets and most liabilities in the Irish banks. A huge part of the problem. 

There is plenty of evidence to suggest that UK banks are safer than Irish banks. Start by looking at the credit default swap market for guidance.


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## thedarkone (12 Apr 2011)

I rang up to open one of these accounts and was told I have to make and attend an appointment at the bank (I am an existing BoI customer but these are "new" BoI funds.)  

What's that all about?  I haven't visited a bank branch since I took out my mortgage years ago!  I sense a hard "cross sell" of other products.  Anyone opened this account?  What's this appointment all about?


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## mcriot29 (17 Apr 2011)

*seems best option*

great rate im going for it


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## Aureus (25 May 2011)

A branch manager told me today that this product is being extended until at least 25th June.


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## Lightning (26 May 2011)

Aureus said:


> A branch manager told me today that this product is being extended until at least 25th June.



Yeah, BoI launched 'issue 3' today, I will update the best buys shortly.


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## Aureus (26 May 2011)

*A Caveat About this Product*

Those interested ought to be aware that there's no provision to withdraw funds early in an emergency.

As I understand it, many fixed rate accounts allow early withdrawals but you have to pay a penalty. With this account, you get one chance to withdraw funds, at the end of the first year, aside from that the money is locked in with no exceptions.


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## Kev (27 May 2011)

CiaranT said:


> Yes.
> 
> 75.52% chance of default inside the next 5 years.
> 91.35% chance of default inside the next 10 years.
> ...



A lot can happen within 5 years,  a lot of time to make improvements to the economy.




mcriot29 said:


> great rate im going for it




  AIB in the UK is covered by the UK guarantee


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## Aureus (27 May 2011)

I tend to believe the EU will not allow depositors in any member state to be burned, even if the country defaults on (or "restructures") its sovereign debt. I would say a greater risk is that our deposits will be eroded by high inflation. But I'm no expert.


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## frankmac (27 May 2011)

Aureus said:


> I tend to believe the EU will not allow depositors in any member state to be burned, even if the country defaults on (or "restructures") its sovereign debt. I would say a greater risk is that our deposits will be eroded by high inflation. But I'm no expert.


 

Or just creamed off by the government in the form of a levy to improve something or other.


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## Lightning (28 May 2011)

frankmac said:


> Or just creamed off by the government in the form of a levy to improve something or other.



Possibly, a wealth levy on savings has been utilised in crisis in the past.


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## Aureus (28 May 2011)

I think that type of wealth levy would not be a clever policy. You might see a big flight of savings into cash under the mattress or to foreign banks. There would also be long term damage to public confidence in Irish-based savings accounts. (Of course the fact that a wealth tax would be unwise doesn't mean it won't happen.)

If it's necessary to raise revenue then, at this point in the economic cycle, taxing savings makes a lot of sense. But a better idea would be to further increase DIRT. In theory there's scope to treat savings interest in the same way as other income, where the top rate is now 50%+. I have no idea if DIRT raises very much revenue though.


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## marksa (29 May 2011)

Aureus said:


> I tend to believe the EU will not allow depositors in any member state to be burned, even if the country defaults on (or "restructures") its sovereign debt. I would say a greater risk is that our deposits will be eroded by high inflation. But I'm no expert.


 
Denmark has already "burned" deposit holders... 
[broken link removed]
...and indeed I think the expression "bail in"  usually involves depositors (>€100k) as well as Senior Bond holders taking a haircut. This seems to be the response of regulators and governments (remember the storm that arose last year over Angela Merkel expecting bond holders to take haircuts on government debt restructures


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## Aureus (29 May 2011)

Interesting article. It states "Holders of senior unsecured debt and even depositors _could_ face losses" (my italics). It seems that senior bondholders have indeed been hit, but I haven't yet been able to find any information confirming how the depositors were treated.


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## Lightning (3 Jul 2011)

Does anyone know if this product is still available ? 

"Issue 3" was due to expire on June 30th or July 1st. 

BoI had 2 links to the product on their website. One is now broken and one has now been removed. Hence, issue 3 is certainly appears closed. 

Will BoI launch Issue 4 tomorrow or has this product been removed?


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## Lightning (4 Jul 2011)

The offer is over, I will update the best buys.


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## theresa1 (7 Sep 2011)

Excuse my basic question but how much could you put in for 2 year's so as the total including interest at end of 2 year's would not take you over €100,000.


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## Bobby1 (7 Sep 2011)

why are you only concerned with €100k? BOI are in the ELG Scheme, which covers deposits in excess of €00k for the length of term the funds are deposited.


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## oldtimer (7 Sep 2011)

Tried to open one of these accounts to-day but they would not accept a cheque made out by my local credit union payable to Bank of Ireland. I have no current account with a bank so am excluded.


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## theresa1 (7 Sep 2011)

Bobby1 said:


> why are you only concerned with €100k? BOI are in the ELG Scheme, which covers deposits in excess of €00k for the length of term the funds are deposited.


 
- Yes was wondering about that - good to know.


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## theresa1 (8 Sep 2011)

2.6 The proceeds of any cheque lodged to the Account may not be withdrawn until the cheque has
cleared. The Accountholder, at the discretion of the Bank, may lodge cheques to the Account that​are payable to third parties. The Accountholder will be liable to the Bank for any losses incurred.


Ask to speak to the Manager.


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## TomOC (6 Oct 2011)

Hi Is this account closed again? I do not see it in the best buys.  I thought it closed last May or June then opened again a few weeks ago. Has it closed again already this time? Thanks


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## Lightning (6 Oct 2011)

It has closed again.

PTSB pay 4.91% for 2 years and 2 months. A better rate for a similar period.


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## jimmyd (14 Oct 2011)

Back again  - [broken link removed]


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