# Is the Bank Guarantee 100% safe? Worst case scenario.



## RMCF (27 Feb 2009)

This is a question that I'm sure many people with savings are asking at present, and I have spoken to a few who are very concerned about their deposits.

So perhaps someone could shed some light on what might happen *IF *the Irish Gov was to default on its repayments or suffer in the money markets and basically went the way of Iceland? Or if the IMF had to intervene?

Would your savings be safe? How could a bankrupt state guarantee billions upon billions in savings?


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## Damian85 (27 Feb 2009)

RMCF said:


> This is a question that I'm sure many people with savings are asking at present, and I have spoken to a few who are very concerned about their deposits.
> 
> So perhaps someone could shed some light on what might happen *IF *the Irish Gov was to default on its repayments or suffer in the money markets and basically went the way of Iceland? Or if the IMF had to intervene?
> 
> Would your savings be safe? How could a bankrupt state guarantee billions upon billions in savings?


 
Well if the country was to default, we would lose our savings!!!

However, we are tied to the Eurozone, for better or for worse. This tie means if the worst came to worst, the Eurozone perhaps, as a whole could prop us up and bail us out? It is hard to imagine the EU allowing any member country to go this way.

I can't see Ireland going the same way as Iceland at all. Iceland by all accounts was a hedge fund with a government. And I couldn't imagine the IMF intervening before the Eurozone would intervene in some form of a stabilisation capacity.

Maybe I'm being too naive here. Ireland is one of the largest open markets in the world and this default threat could develop?

Opinions..........


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## Smart_Saver (27 Feb 2009)

I've a query on deposits as well. supposing the bank does go wallop or for instance gets nationalised. So then the government scheme kicks in to guarantee your savings up to 100K. 
My Question is does this guarantee say when you can get your cash out of the bank ?  i.e. can you get it the following day or will there be a waiting period at the discretion of the government....e.g. the way bigger creditors get first bite at the cherry ???


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## Smart_Saver (27 Feb 2009)

On doing some research I found the following info.
1: See following link on how much you are entitled to
http://www.itsyourmoney.ie/index.jsp?1nID=93&2nID=96&pID=145&nID=385&aID=0#what
2: Down at the bottom of the page on the above link is important info on the Investor Compensation Scheme. In here is a link to the Administrator of any cases where a Bank may default http://www.investorcompensation.ie/index.php
3: Within this page is a Q & A section http://www.investorcompensation.ie/faq.php
Qs 10 to 13 inclusive deal with how compensation should be paid.

This is as much info as I can gather. Any bankers out the who might care to verify that this is accurate and up to date ???


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## Bob_tg (27 Feb 2009)

Damian85 said:


> Well if the country was to default, we would lose our savings!!!


 
Would we lose our savings if they were in a foreign-owned institution, do you think?


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## z109 (28 Feb 2009)

It's not a certainty that we would lose our savings if the government were to default (an unlikely proposition, IMO, not because we aren't up the creek, but just that a formal default would confirm banana republic status and make cheap credit unavailable to the nation forever after). A bailout by the IMF/the EU is possible given a series of bond market failures (this was what happened to Hungary). 

So the worst case would actually be, IMO, if the banks collapsed and the guarantee was called on. The government would not have the cash on hand and might not be able to borrow it. What I believe would happen then is that the assets and liabilities (deposits included) of the banks would be reconstituted into a new bank, or the existing banks would be retained as nationalised entities (like Anglo). The new bank would have access to the ECB for repo funding to repay deposits if there was a run (that is the function of the ECB, after all). Plenty of nervous money would flow out of the banks and into somewhere else. So the net hit to the euro system is nil.

I don't believe in this scenario that the non-Irish banks would be affected.


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## doontheroad (6 Mar 2009)

would the people in Ireland get the money first I have money in the AI but live in the UK/born but I am an Irish citizen through my parents with an Irish passport


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## sputnik (7 Mar 2009)

Just reading thru this thread is confusing me.  The 100,000 limit is gone isnt it? AIB told me that from roughly Nov last year your deposits were guaranteed for 2 years, with no limits. I'm worried because due to the tragic loss of my husband 3 months ago, myself and my 2 children,  now have some money from his life insurance and I would never forgive myself if this money was lost due to me putting it into an unsafe account.   Is nowhere safe?


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