# Bank/Economy Failure Question



## gilboy (16 Sep 2010)

Hi

I am thinking of opening a rabodirect bank account. I have seen the following question posted in a couple of threads but no definite answer given. 

If I put money from an irish account in to an account like rabo, then the irish economy/banking system fails and we switch back to our own currency, e.g. punts - does this mean my savings in the rabodirect account will be converted in to this new currency?

PS - sorry about the real gloomy question - buts its been bugging me

Thanks


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## PaddyW (17 Sep 2010)

I imagine it would stay in Euros as Rabo is not an Irish bank?


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## Duke of Marmalade (17 Sep 2010)

First of all it is almost impossible to conceive how the action you fear could ever be workable or make sense despite David McWillams' bluster.

Let us say Argentina is the best precedent (and there are many ways in which we are oh so different), what they did was announce a freeze on all dollar deposits in the State and then converted them. A similar action here would, I think, catch Rabodirect.ie as they state that they are licensed by the Central Bank i.e. they are an Irish bank, but maybe I am wrong on that. 

Rabodirect.ie appears to have back up guarantees from the Rabo group. It would be interesting to ask Rabo if such guarantees would make good the sort of Argentinian move described above.

Of course a deposit with Rabo in Amsterdam would escape.


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## Jester (19 Sep 2010)

Rabo's ads state that they are authorised by the Dutch central bank. They are not subject to the Irish guarantee system, but the Dutch one.


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## mmclo (20 Sep 2010)

That is the crucial differnce with Argentina, effectively your money may as well be sitting in Amsterdam. If we go back to the punt (totally agree it's lunatic) you have euro in Rabo goverend by their regulatory regime.

So the euro has the plus of ensuring much more support in the economic crisis (ECB buying bonds, stabilisation fund) but much more freedom for Irish people to put their savings effectively offshore thus fueling the problem?


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## mattmacg (22 Sep 2010)

I have an account with Rabo direct. I asked that question a year ago. The question was pooh poohed, but then they said that if Ireland left the euro, any Irish Rabo direct customers would have their euros converted into the new currency.


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## Happy Girl (22 Sep 2010)

I asked Rabo that same question last week and was told that basically there is no legislation currently in place that can clarify what would happen to Rabo investors' funds in such a situation. I was told that "in the highly unlikely event" of aforementioned scenario, legislation would have to be put in place to legislate what would happen to such funds. I also asked  if my funds would have a greater degree of safety if I dealt directly with "Rabo" in the Netherlands and basically had my funds "within" the Netherlands. I was told that it is irrelevant whether I lodge with Rabo in Ireland or the Netherlands as monies all go to the Netherlands anyway.


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## jpd (22 Sep 2010)

The Islandic debacle of 2008 is a recent example of what happens when a country's banking system goes bang!

The UK and Dutch government stepped into cover some of the depositor's funds held in their countries but the fallout is still ongoing and is very messy.

I suspect that much the same or even worse would happen if a eurozone country underwent a similar crisis - in fact it is more likely that the other eurozone members would cough up to prevent such a collapse and the ensuing disruption but at a very high price -ie drastic reductions in public service pay and welfare payments cf Greece.


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## Bcommercial (22 Sep 2010)

My gut feeling would be that any euro accounts held by citizens within the Irish state would be subject to conversion to the new Irish Punt, no matter what bank they are held with, eg Rabo, NR, NW(uk) etc, since they are all operating within the Irish state. 
It also doesn't seem credible as Happy Girl was told that "it is irrelevant whether I lodge with Rabo in Ireland or  the Netherlands as monies all go to the Netherlands anyway." Surely an account opened outside the state and held directly in the Netherlands would not be subject to Irish legislation (and therefore not subject to new Punt conversion). That answer from Rabo appears suspiciously circumspect and perhaps designed  more to allay fears of possible widespread withdrawals than to disclose the truth. And if indeed it were the case that "legislation would have to be put in place to legislate what would happen to such funds", I think we all know already what Mr Lenihan's legislation would look like.


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## Kev (22 Sep 2010)

It is very unlikely that Ireland or any of the small island will go bankrupct as they there are small countries and the EU would be able to bail them out. If a country  like Spain which is a far bigger economy was in deep trouble then this woudl creat a much bitter problme for the EU.


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## Bcommercial (22 Sep 2010)

Oops! On re-reading Happy Girl's post it would appear she was talking about Rabo investment funds and not cash bank accounts, so forgive my oversight there.


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