# Why aren't more people with Northern Rock?



## Treehouse (21 Jun 2008)

I was wondering why more people on this board are not recommending that large lump sums automatically go to NR's online account?

I recently advised some family members to put the proceeds of their house sale into NR rather than any other institution for 2 reasons:

1. Their 5% rate is not far off the market lead on large deposits, and has no notice time for withdrawals
2. They are the safest bank in the world.

This combo seems to me to offer an unbeatable combination of return and security.

But I notice NR doesn't get recommended that often, so I am just a wee bit worried that my advice to these people might be missing something. In this economically turbulent time, with loanbooks potentially packed with (de facto) sub-prime, bank shares sliding, and jitteriness about everyone from Anglo to Bradford and Bingley, why is it that the NR option is not a more popular recommendation around these parts?


----------



## Duke of Marmalade (21 Jun 2008)

You're assessment is correct and has been alluded to before on AAM. I was going to put a wee bit with them myself but the red tape (ID etc. etc.) seemed even more onerous than usual so I never bothered. BTW I do hear that if you push hard enough you can get considerably more than 5% from Anglo and others, but maybe there is a reason for that.


----------



## Treehouse (21 Jun 2008)

Harchibald said:


> I was going to put a wee bit with them myself but the red tape (ID etc. etc.) seemed even more onerous than usual so I never bothered.




This isn't really true. These family members I referred to set up their online accounts in 15 minutes (I helped one of them do it and it was easy peasy), went in to NR on Harcourt St. the next day with Passport + 2 bills + lodgement cheque and bingo, the account was up and running within a day or two. It really was incredibly smooth and no more bothersome than opening any bank account, maybe even simpler than some.


----------



## TSThomas (21 Jun 2008)

Nah, can't say I found setting up with Northern Rock any more difficult than any other bank I setup via post either (Rabodirect, Halifax, First Active, Anglo Irish...).

The usual recommendation here as regards deposits is along the lines of First Active eSavings for 1st €15000 (Transferring €x every month to keep you below €15000, or the rate drops), Halifax Flexi-Saver for next €10000 for 1 year, Northern Rock for the rest.


----------



## mimi rogers (21 Jun 2008)

they require a minimum opening deposit of €1000. maybe that's why. not everyone has that. most of the other banks require a much smaller amount such as €1.

mimi


----------



## rmelly (21 Jun 2008)

Treehouse said:


> 1. Their 5% rate is not far off the market lead on large deposits, and has no notice time for withdrawals
> 2. They are the safest bank in the world.


 
What % of people do you think are concerned about their banks stability? Quite a small percentage I'd have said.

Maybe those savvy enough have gone to the market leader, rather than settle for 'not far off'.


----------



## Treehouse (21 Jun 2008)

rmelly said:


> What % of people do you think are concerned about their banks stability? Quite a small percentage I'd have said.
> 
> Maybe those savvy enough have gone to the market leader, rather than settle for 'not far off'.




A very small percentage, yes. But that doesn't mean it's not a reasonable concern given the economic volatility we see around us, perhaps even for the shortish term.

As for your "not far off" point, the differences in interest rates are really pretty small - even on a massive amount of money like say €500k, you are only talking about differences of a couple of k per annum at most, which someone with that much money might consider a reasonable premium to pay for 100% security.


----------



## rmelly (21 Jun 2008)

I haven't seen anything to say that it is a reasonable concern.

If you took Northern Rock out of the equation (i.e. it doesn't exist, or doesn't have the BOE backing), would you still be reasonably concerned about putting the money into any of the major Irish banks, or Rabodirect? What would you do with a large lumpsum in that case?

Also don't forget that the Irish government has bailed out a major Irish bank in the past - maybe they'd do it again?


----------



## WaterSprite (21 Jun 2008)

I have a lump sum that I want to put into one/more of the banks.  I am reticent to put it all into NR because of the scare earlier in the year.  My reticence may or may not be logical or well-founded, but it exists all the same.  Even though I already have an account with NR, I'll probably split it out between NR and Rabo... If it was e.g. my parents' money, I'd probably be even more nervous - again, not saying this is rational behaviour but when it's so close to home, sometimes rationality goes out the window...

Sprite


----------



## Ben Graham (21 Jun 2008)

Logically Northern Rock should be considered as THE safe haven for large deposits. The reason being, of course, is that the UK Govt now own the bank. The bank has gone from being the most unsafe to being the safest.

I understand there was an outcry from Danske Bank when NR recently tried to open branches in Denmark. DB claimed (rightly) that NR had an unfair competitive advantage over the non-privatised banks. NR withdrew.

I think the problem is the lack of (physical) branches for NR in Ireland. There is one in Harcourt St. and, erm.. where else in Dublin? 

It makes them seem less "real" than e.g AIB or BOI.

I know this is a purely psychological thing.


----------



## ClubMan (22 Jun 2008)

Treehouse said:


> I was wondering why more people on this board are not recommending that large lump sums automatically go to NR's online account?


Plenty of people do recommend them regularly around here.


----------



## iggy (22 Jun 2008)

I seem to be recommending them all the time, I should be on commission at this stage! It`s a no-brainer as far as I`m concerned, if you have a large lump sum and want full access with 100% guarantee..no sneaky stuff, as some other banks claim, then where can you find a better all round deal?


----------



## Sailor (22 Jun 2008)

I would agree with that. I must also point out that their website is working much better, and faster since the big blow out.


----------



## Treehouse (22 Jun 2008)

rmelly said:


> I haven't seen anything to say that it is a reasonable concern.


 
Have you seen today's papers? A lot of scary stuff in there about the  health of Irish banks. I don't want to scaremonger by suggesting any are in serious danger, but to say there is no possibility of a bank failing is wrong I think.

I saw a report on Newsnight (BBC) a couple of months back and the reporter said there was a 5% chance of a major British bank going under (and he meant major as in Lloyds, Barclays, NatWest etc). I found that a shockingly high chance and wondered if that's the case in the UK, what about Ireland?



rmelly said:


> If you took Northern Rock out of the equation (i.e. it doesn't exist, or doesn't have the BOE backing), would you still be reasonably concerned about putting the money into any of the major Irish banks, or Rabodirect? What would you do with a large lumpsum in that case?


 
Easy, I'd put it into triple-A rated Rabo and keep it away from the Irish banks.



rmelly said:


> Also don't forget that the Irish government has bailed out a major Irish bank in the past - maybe they'd do it again?




Yup, maybe they would.


----------



## iggy (22 Jun 2008)

rmelly said:


> Also don't forget that the Irish government has bailed out a major Irish bank in the past - maybe they'd do it again?


 Well personally I don`t want to even consider `maybe` with my hard earned cash if I don`t have to.


----------



## rmelly (22 Jun 2008)

Treehouse said:


> Have you seen today's papers?


 
Well, since the post was made yesterday (Saturday), no, I hadn't read Sundays papers. Having read them (Sunday Times & SBP), I still haven't changed my opinion. PTSB profits expected to fall to €520 million - disastous...Note: I didn't get chance to read in detail yet as I was babysitting, so maybe I missed something?

From day one it was made clear the the Irish banks had minimal direct exposure to subprime backed products, as a result none have posted multi billion euro writedowns unlike US, UK and European counterparts. Has this changed? Have any Irish banks announced IPO's to shore up funding gaps?

I have no vested interests either way, but I am not seeing the evidence, point me to it and I am open to persuasion.

Obviously the fact that some have ties to UK banks may affect them.


----------



## Ben Graham (23 Jun 2008)

David McWilliams wrote a piece in yesterday's Sunday Business Post about the risks to Irish banks from the credit crunch. It makes for sobering reading. The piece is available online.

(BTW Lloyds TSB is currently rated AAA by Moody's.)

The article has prompted me to look into Northern Rock as a safe haven for deposits.


----------

