# Re ; Savings Bonds with An Post



## Marantze (24 Nov 2010)

Just one simple question
How safe are my funds with the Post Office for a five year bond term??


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## Lightning (24 Nov 2010)

Your An Post deposit is used to fund the national debt via the NTMA. An Post have no access to the ECB or ICB. 

Short to medium term, if there is a bailout of the state that is approved by the Dail, then your money is safe. 

Long term, the majority of investors believe that Ireland will have to restructure it's debt, again, An Post deposits fund the national debt.


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## Marantze (24 Nov 2010)

CiaranT said:


> Your An Post deposit is used to fund the national debt via the NTMA. An Post have no access to the ECB or ICB.
> 
> Short to medium term, if there is a bailout of the state that is approved by the Dail, then your money is safe.
> 
> Long term, the majority of investors believe that Ireland will have to restructure it's debt, again, An Post deposits fund the national debt.



Thanks CiaranT,for a very informative reply.


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## Lyndan (30 Nov 2010)

If long term we have to restructure our debt - what does that mean?

If I have 100k in An Post Savings Certs - will I lose this or will I just loose the interest?  

Is An Post not guaranteed like the other banks?


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## jpd (30 Nov 2010)

An Post does not hold your deposits - it acts as an agent for NTMA (National Treasury Management Agency) and manages the depositis on their behalf. Thus saving certificates and bonds, strictly speaking, are loans to the Irish government and not deposits.

They are guaranteed by the government.


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## Lightning (30 Nov 2010)

Lyndan said:


> If long term we have to restructure our debt - what does that mean?



Holders of NTMA issued Irish sovereign debt will need to take a haircut. For example, take 30 cent on each euro. 



Lyndan said:


> If I have 100k in An Post Savings Certs - will I lose this or will I just loose the interest?



There are no provisions in law as to how to handle a sovereign debt restructure. 



Lyndan said:


> Is An Post not guaranteed like the other banks?



Totally different guarantee. 

Irish banks are guaranteed by the Irish government and to some extent backed up by the ECB and now the ICB. 

An Post deposits are state guaranteed with the same guarantee as Irish sovereign debt.


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## Lemurz (30 Nov 2010)

So if I read this correct, An Post Saving Certs/Bonds have a lesser guarantee than a bank deposit should the state default in the future?


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## browtal (10 Dec 2010)

Is this correct,
 that An Post savings bonds are less secure than the bank deposits.
Has the first €100,000 the same guarantee as bank deposits. 
Sorry maybe this is a repeat question, but it is all difficult to take in. Thanks browtal


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## Brendan Burgess (10 Dec 2010)

It's a very interesting question and it's unchartered territory.

Savings certs represent money owed by the government to you. They are more likely to pay that before they honour a guarantee.  If the country does go bust, I could see them reneging on the guarantee before restructuring debt. 

On the other hand, for you to lose on a bank deposit, both the bank and the government has to go bust. So if you have a deposit with Bank of Ireland which stays solvent while the Irish Government goes bust, your money would be ok. However, if the government goes bust, it's likely that all the banks would fail as well.

The main principle is not to put your money on deposit anywhere where you can't get immediate access without penalty or loss of interest.

Check out Brendan Burgess explains how to protect your deposits


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## Lightning (29 Dec 2010)

Ronan Lyons tweeted an interesting fact about Prize Bond savings today:



> Did you know? 1 billion EUR of Ireland's national debt is now actually prize bonds ...


 
 An Post/NTMA savings seem to be making up an increasing portion of our sovereign debt. Whilst, Irish bank deposits are clearly decreasing, AN Post/NTMA deposits perversely seem to be increasing. If debt restructure occurs in the future, the potential liability/affect to An Post/NTMA/Prize bond savers could be significant.


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## jpd (29 Dec 2010)

If Ireland does default, it may take the option to reschedule the debt repayment rather than outright default - that is, instead of repaying the irish Governement Bonds as they mature, they will force the holders to re-invest for a further 5,10 or so years. 

It is unclear what this would mean for An Post/NTMA savings bonds and certificates - which are redeemable on demand. Perhaps thay would only allow you to withdraw 50% and you would have to wait a year or two for the balance.


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## Black Rock (24 May 2011)

*"Default" - Parliamentary Question - PQ to Minister Noonan*

*"Default" - Parliamentary Question - PQ to Minister Noonan* 
On Tuesday 12 April 2011 the Minister for Finance responded to a Parliamentary Question (PQ) from Deputy Catherine Murphy with regard to default. 
For completeness I have copied the PQ and the Minister’s reply – 

*122. Deputy Catherine Murphy asked the Minister for Finance if a risk assessment has been carried out since September 2008 in relation to a sovereign default; if so, what are the contingency arrangements; and if he will make a statement on the matter. *

[FONT=Calibri,Calibri]*[FONT=Calibri,Calibri]Minister for Finance (Deputy Michael Noonan): [/FONT]*[/FONT]
_[FONT=Calibri,Calibri][FONT=Calibri,Calibri]In relation to the issue of sovereign default, let me be clear: Ireland has never contemplated the possibility of defaulting on its sovereign debt and this position has been restated on several occasions. The Government, without any question, will fully honour all its legal obligations to its creditors and has no intention whatsoever of allowing a default. [/FONT][/FONT]_


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