# Greek default- what happens to euro banks ?



## BICIP (27 Jun 2011)

If/ when Greece defaults won't all these so called safe German and French banks take a huge hit and possibly risk collapse? Therefore are you better off with money in an Irish institution- particularly if you have less than 100k and all your dealings and spending are in Ireland anyway?


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## Godfather (27 Jun 2011)

I don't know why but I rely more on Sarko's or Angela's commitment to protect deposits up to 100K Eur than Kenny's or Berlusconi's...


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## andycole (27 Jun 2011)

This is a European Directive or Commitment to protect deposits up to 100K Euro - so its not any specific national government within the European Union e.g. French, German or Irish Government.

However am I correct that at present this does not actually have any legal basis rather it can be read more as a recommendation? Has Ireland incorporated this directive into its legal legislation? 

But we know of one country which has already followed this directive and that is Denmark where depositors over 100k were given I think a 41% haircut in a bank that failed recently over there.

The only way I think Ireland would not follow through on this directive would be if Ireland was to break away from the Euro project as a whole?


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## Chris (27 Jun 2011)

Ireland does not have the money to honour even a small amount of deposits going bad. The guarantee is simply worthless, which is why so much international, corporate and quite a bit of private money has flooded out of Irish banks. Maybe the EU or ECB would step in, but I for one am not counting on it.


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## andycole (27 Jun 2011)

As this is a European Directive would the ECB not have to step in and meet this promise? The financial ECB or the political European Union would probably have no choice that is if they wanted Ireland to remain as a member of the European Union?


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## Godfather (27 Jun 2011)

andycole said:


> This is a European Directive or Commitment to protect deposits up to 100K Euro - so its not any specific national government within the European Union e.g. French, German or Irish Government.



Wow!!! Where did you read such fantastic news???


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## andycole (27 Jun 2011)

Its available from here.....

Quote from this link - "For bank account holders, the measures adopted today mean that in case their bank failed, they would receive their money back faster (within 7 days), increased coverage (up to € 100 000) and better information on how and when they are protected."

Quote from this link - "Less red tape: for example, if you live in Portugal and have your account at a failing bank whose headquarters are based in Sweden, the Portuguese scheme would repay you on its own initiative and act as your contact point. The Swedish scheme would then reimburse the Portuguese scheme."

Link - http://europa.eu/rapid/pressRelease...format=HTML&aged=0&language=EN&guiLanguage=en


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## Godfather (27 Jun 2011)

Exactly, we are still talking about Nations here. The ECB doesn't care at all if nations do not keep their promises in my opinion... 

And Sarko' and Angela seem a bit more reliable to me...


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## BICIP (27 Jun 2011)

So if u live in Ireland the Irish scheme reimburses rather than scheme in which you have the cash?? So what's the point in moving it abroad?


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## andycole (27 Jun 2011)

If an Irish person moves abroad to take up employment in Germany or France; 
and his/her savings are still located in deposit savings accounts here in Ireland with a Irish Banking Institution, then from my understanding with regard to this European Directive,  this person can avail of the German or French Deposit Guarantee Scheme, and get refunded an amount up to 100K Euro deposit savings within a 7 days period deadline from the German or French Deposit Guarantee Scheme. 

The German or French Deposit Guarantee Scheme can then look to be refunded from the Irish Deposit Guarantee Scheme. 

But what happens if Ireland defaults?


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## Godfather (27 Jun 2011)

andycole said:


> If an Irish person moves abroad to take up employment in Germany or France; and his/her savings are still located in deposit savings accounts here in Ireland with a Irish Banking Institution, then from my understanding with regard to this European Directive,  this person can avail of the German or French Deposit Guarantee Scheme, and get refunded an amount up to 100K Euro deposit savings within a 7 days period deadline from the German or French Deposit Guarantee Scheme.



Sorry I disagree... In my honest opinion Germany and France care about their own banking system, they don't care about someone living there who doesn't have money into their own banking system... 

I'm sorry andycole... I wish the EU would look united as in your interpretation...


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## dockingtrade (27 Jun 2011)

do ye think that greece will default? seriously? The french and german banks will colapse and so will the euro. whether its a restructuring, debt forgiveness of some kind,  an extension or printing more money the greeks wont default.


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## Lightning (27 Jun 2011)

andycole said:


> As this is a European Directive would the ECB not have to step in and meet this promise? The financial ECB or the political European Union would probably have no choice that is if they wanted Ireland to remain as a member of the European Union?


 
There is currently *NO European wide guarantee on deposits*.

The only guarantee on deposits with the 3 Irish banks is the Irish state guarantees.

The EU and/or the ECB would not have to step in. 

The ECB has previously threatened to remove their 100 billion+ emergency liquidity to Irish banks .


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## andycole (27 Jun 2011)

CiaranT, 

link - http://europa.eu/rapid/pressRelease...format=HTML&aged=0&language=EN&guiLanguage=en

is this not a european wide guarantee on deposits?

also even today with this Danish Bank collapse - they say that people with deposits over 100K will receive a 26% haircut...but for those under 100K a full 100% guarantee is being stood over in accordance with this eu directive?

"Creditors, including depositors with deposits exceeding 100,000 euros in Fjordbank Mors must therefore anticipate losses of approximately 26 percent as the bank closes," the FSA said.
"The bank's shareholders will have to acknowledge that their investment is lost, as will the owners of the subordinate liabilities," the FSA said.
Fjordbank Mors said at the weekend that about 450 of its 73,000 customers had deposits in the bank that would not be covered by the 100,000-euro guarantee.


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## Godfather (27 Jun 2011)

dockingtrade said:


> do ye think that greece will default? seriously? The french and german banks will colapse and so will the euro. whether its a restructuring, debt forgiveness of some kind,  an extension or printing more money the greeks wont default.



Juergen Stark released a great interview today stating that there is no way EU will passively accept blackmailing from countries who don't want to face strong reforms... And I completely agree with him... 

Here is the article ---> http://www.bloomberg.com/news/2011-...be-blackmailed-to-aid-greece-at-any-cost.html

IF the greeks will default Europe might face a big fall down in the short term but there could be a long term vision aiming to a better future than having to keep feeding unrealistic dreams...  

I'm sorry I might pass as pessimistic but I am looking at long term effects of strong decisions sometimes...


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## cremeegg (27 Jun 2011)

Interesting article thanks for link.

He also mentions that the ECB lending to banks will be gradually phased out as the situation on the money markets has improved. 

This improvement may not help Irelands basket case banks, we shoud be selling them to well capitalised foreign banks now, while there is still funding available to them


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## Chris (28 Jun 2011)

andycole said:


> link - http://europa.eu/rapid/pressRelease...format=HTML&aged=0&language=EN&guiLanguage=en
> 
> is this not a european wide guarantee on deposits?


Read the heading of the link you posted: "Commission proposes package to boost consumer protection and confidence in financial services"
It is simply a proposition. And even if it becomes a directive, directives are simply recommendations of "best practice" and member states can voluntarily implement them into law.



andycole said:


> also even today with this Danish Bank collapse - they say that people with deposits over 100K will receive a 26% haircut...but for those under 100K a full 100% guarantee is being stood over in accordance with this eu directive?



No, the Danish deposit guarantee covered €100000, it had nothing to do with an EU directive or commission press release. And the reason depositors are getting money back is because the Danish state is not bankrupt and can honour the guarantee.


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## Godfather (28 Jun 2011)

Chris said:


> "Commission proposes package to boost consumer protection and confidence in financial services"It is simply a proposition. And even if it becomes a directive, directives are simply recommendations of "best practice" and member states can voluntarily implement them into law.



Totally agree... Those are just political promises... Or "statement of directions" in order to mask them with diplomacy (subject to change of direction anytime)...


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## Lightning (28 Jun 2011)

@andycole - see the post from @Chris, there is no European wide guarantee currently in place.


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## andycole (28 Jun 2011)

Chris, CiaranT, Godfather..thanks guys for the replies.
Its not very reassuring for anybody here in Ireland that may have a non-resident deposit account located somewhere in Europe. In the case of any European Bank going bust I wonder could non-resident deposit account holders be automatically disqualified from the 100K Euro Deposit protection?


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## Godfather (28 Jun 2011)

andycole said:


> Its not very reassuring for anybody here in Ireland that may have a non-resident deposit account located somewhere in Europe. In the case of any European Bank going bust I wonder could non-resident deposit account holders be automatically disqualified from the 100K Euro Deposit protection?



         Not sure I fully understand your question... But to make it simple: usually the rule is that the Nation connected to the HQ of the Bank where you have the account might have deposit protection in place and that's not looking at the nationality of the account holder as far as I know AT THE MOMENT (and usually 100K Eur/depositor per Bank in most of the EU-countries, let me point out the word "usually"). So for example I've an account with Unicredit in Italy (big if not the biggest Italian Bank) and that's protected up to 100K Eur from the italian government... I hope this helps a bit... 

Anyway each bank's website nowadays should have infos on any deposit protection scheme they are connected to... It's tough to generalize sorry!


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## bryanod (29 Jun 2011)

Godfather said:


> I've an account with Unicredit in Italy


 
Is this the same unicredit that went limit down last week on downgrade watches from Moodys on concerns over Italy and on rumours they won't pass stress tests? :-\


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## Godfather (29 Jun 2011)

YES!!! 

I'm planning to move 99% of savings away from it in the next few weeks!


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## DrMoriarty (29 Jun 2011)

From John Carney at CNBC: [broken link removed]

Cheerful stuff.


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## PetPal (29 Jun 2011)

Godfather said:


> YES!!!
> 
> I'm planning to move 99% of savings away from it in the next few weeks!


 Any idea where you'll move it to?


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## Godfather (29 Jun 2011)

PetPal said:


> Any idea where you'll move it to?



As I can't fly very much I'm spreading around german banks and some banks like Rabo or NIB in Ireland... 



DrMoriarty said:


> From John Carney at CNBC: [broken link removed]



Extremely clear explanation!!! Thank YOU!!!


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## Troy McClure (29 Jun 2011)

andycole said:


> Chris, CiaranT, Godfather..thanks guys for the replies.
> Its not very reassuring for anybody here in Ireland that may have a non-resident deposit account located somewhere in Europe. In the case of any European Bank going bust I wonder could non-resident deposit account holders be automatically disqualified from the 100K Euro Deposit protection?


 
If you have an account in another EU country you should be covered by whatever level of deposit guarantee that's in that country.


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