# Bank deposit Levy\ Transferring Funds



## Kant (19 Dec 2013)

Hello AskAboutMoney,

I wish to move savings out of reach of the possible bank levy in 2014.

I contacted HSBC premier and I would have to make way up to a branch in the North to open an account with them. Also they want me to have my salary going into a HSBC account.

Is there a slightly easier alternative??? Are there banks that allow one to open an account without visiting a branch??

Is there a another Thread (I did search) which had advice on (a) possibility of Bank Levy (b) Avoiding (c) transferring Monies outside eurozone

Kant


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## Lightning (19 Dec 2013)

What exactly do you want to do?

Are you looking to open a GBP account in NI?


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## Jim2007 (19 Dec 2013)

How do you see a bank levy impacting your savings and how can you be sure that a foreign bank is not going to have to pay a similar levy to it's government???  Now that the recession is starting to wind down most governments are seeking to build up some kind of banking security fund... So a levy or special tax is not out of the question for them either, on top of this you have Basel III coming up and that will impact the capital structure of all banks world wide... I don't see an merit in the idea of simply putting it outside the country, making it some how safer..


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## Kant (19 Dec 2013)

Thanks for reply.
First and foremost I am looking for advice on the topics of safe places to keep savings and bank levys.

I have monies in Irish banks that I am hoping to use to buy a house sometime in 2014, hopefully.

I have read a few pieces recently which indicate a bank deposit levy could be imposed in Ireland\Eurozone in 2014. (eg A recent McWilliams piece)

Does it seem a reasonable reaction to place savings in a bank where the levy may not be imposed? Does HSBC UK fit this bill?

Are there any better options to protect savings from levy before we find a house to buy??


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## Kant (19 Dec 2013)

"How do you see a bank levy impacting your savings and how can you be sure that a foreign bank is not going to have to pay a similar levy to it's government??? "
WEll - I hope it wont be as severe as Cyprus 40.7% on deposits over 100K. But i have not read anything which trys to assess the magnitude I've just read that its coming


"Now that the recession is starting to wind down most governments are seeking to build up some kind of banking security fund... So a levy or special tax is not out of the question for them either" True. But it would seem from the information available regarding bailouts, bailins, eurozone, troika etc...that a deposit of 100K in USA\UK is safer from a levy than 100K deposit in Ireland. ? .

 "on top of this you have Basel III coming up and that will impact the capital structure of all banks world wide..." Im not sure of the Basel III implications


 "I don't see an merit in the idea of simply putting it outside the country, making it some how safer.."
Haven't most Levys thus far had boarders? Within you get Levy'd. Without you don't.


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## Jim2007 (20 Dec 2013)

Kant said:


> "How do you see a bank levy impacting your savings and how can you be sure that a foreign bank is not going to have to pay a similar levy to it's government??? "
> WEll - I hope it wont be as severe as Cyprus 40.7% on deposits over 100K. But i have not read anything which trys to assess the magnitude I've just read that its coming



Well your basic assumption is wrong - a bank levy and what happened in Cyprus are two completely different things.  Before you make any decisions you need to make sure you understand exactly what is involved...

In general most UK banks have a far lower T1 ratio than most mainland Euroland banks and even Irish banks for that matter... combine that with their very high exposure to investment banking and relative easy going regulatory style of the City and they don't look so hot to me..


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## Kant (20 Dec 2013)

Thanks for reply Jim

Sorry for the lack of clarity in my posts. I have limited knowledge in these matters so formulating a question definitively is quite difficult. 

In work I find my job as an expert in X is, in part, to help others formulate their questions without the nomenclature and knowledge of the subject.

I answer the premise of their question. I dont look for holes in their logic and send them packing."get the boat pal, you cant use wrench for that piping" 



What happened in Cyprus: "The Bank of Cyprus depositors are set to lose 47.5 percent of savings on accounts holding more than 100,000 euros (USD 132,000) as part of an EU-led bailout plan aimed at saving the Cypriot government from bankruptcy.
....at least 47.5 percent of savings over 100,000 euros at Bank of Cyprus will turn into shares, with levies used as equity to recapitalize the Bank of Cyprus."


Another Try at the question: I have €100K-€200K Savings in AIB\PTSB\BOI. I want it to be safe. I have heard news that the IRL Gov may be forced to introduce something like a deposit levy in 2014. 

Should I move the money? 
Where and how should I move it?


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## ryaner (20 Dec 2013)

Your first point should be to diversify and spread the risk around. At this stage no one really knows what will happen if/when a banking levy occurs. 

Also given that you legally have to declare offshore holdings to the Revenue, they could easily come to you after the fact with a tax bill should any levy be country wide. However most likely it'll be restricted to failing banks (assuming you ignore what the government did with the pension levy) and that means large depositors should be looking at the stability of the banks.


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## Gatekeeper (20 Dec 2013)

*Irish Banks*

Hi All,

 What is Basel 111?  And what is so different between what happened here and in Cyprus???  It was a bank levy that was imposed there and one that will most likely be imposed here too. I don't understand the difference.


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## Jim2007 (20 Dec 2013)

Basel III, is a requirement for all banks world wide to increase their T1 ratio to about 12 or 13%.  This is a measure of how well a bank would be able the handle a serious loss of capital in normal business conditions.  

Prior to the bail out most UK and Irish banks had a T1 ration of around 5 to 7%. Where as post bailout UK banks are still around the same or lower level, but Irish banks have moved closer to 10% in most cases.

For example, UBS (Switzerland) had a T1 ratio of around 23% when the recession hit and they lost $40B in capital and the Swiss government had to kick in £7.5B to shore it up.  Had UBS had a typical Irish/UK T1 ratio, then the Swiss government would have had to kick in a lot more cash.

UBS's T1 ratio had got back up to around 17% in 2010, when it was hit again by a London trader for $4B, this time it was able to deal with the loss itself.

In France, SSGS had a ratio of over 12% when it too got hit by a rogue trader for around $5B and again it was able to handle the hit.

So T1 ratios are very important when it comes to picking a 'safe' bank.


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## Gatekeeper (20 Dec 2013)

*Irish Banks*

Hi Jim 2007,

 Many thanks for your reply.  I understand the Basel 111 now but still don't understand the difference between us and Cyprus.  A levy is a levy after all.  Guess its a  matter of waiting to see what happens now.


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## Jim2007 (20 Dec 2013)

Gatekeeper said:


> Hi Jim 2007,
> 
> Many thanks for your reply.  I understand the Basel 111 now but still don't understand the difference between us and Cyprus.  A levy is a levy after all.  Guess its a  matter of waiting to see what happens now.



Well a bank levy is against the bank's capital and income and will not impact depositors accounts, where as in Cyprus there was a bail in, where depositors savings where converted to capital for the bank, a very different thing.

Euroland governments are seeking to build up a reserve which can be used to bail out banks in the future, so it is to be expect that in the coming couple of years some or all banks will be hit with a bank levy, but this should have no impact on depositors accounts.  The main impact will be on the shareholders, who are unlikely to receive any dividends, which is a concern none the less because traditionally pensions have used bank dividends to fund pensions.


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## Jim2007 (20 Dec 2013)

sahd said:


> If you are interested in moving your Euros into Sterling - that would be one way to avoid any future "hit" on your Euro savings.



Assuming that the UK bank does not take a bigger hit…  And if they did, the BOE does not have the deep pockets of the ECB nor the reserves of 17 countries behind it!


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## Jim2007 (20 Dec 2013)

*So what kind of bank should I look for?*

My preferred bank would be:

- A government guarantee if possible 
- One with a high T1 ratio, say 12+ percent
- A low or no exposure to Investment Banking operations
- A low exposure to credit card debt
- No outsourced IT
- Transparent fees (not free banking where the fee is hidden somewhere else)

In other words a small regional or local bank.  In my case here in Switzerland, it is the Post Office bank.  It is unlikely you'll find a bank that ticks all the boxes, but try to get as many as you can.  In my case there is no government guarantee...


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