# Nationwide UK Ireland Launch Sterling Deposit Products



## Lightning (9 May 2012)

Nationwide UK Ireland have launched GBP deposit accounts for the first time.

The details are here: [broken link removed]

An additional non-EUR deposit option but the rates are not great.


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## Brendan Burgess (10 May 2012)

Hi Ciarán

That is very interesting.  It's a sort of Irish Sterling account. 

So it's subject to 30% DIRT

Is it the same as having a sterling savings account in the UK? 

If Ireland leaves the euro, presumably this account would be unaffected. 
If Irish banks collapse, this account would be unaffected. Obviously if Nationwide UK collapses, this account would be affected.

While the risk of these events are small, they should be considered. See Protecting your savings against a euro breakup

I had a euro savings account with them and I found their service excellent. 

I note this information on their website, which I had never seen before anywhere else. It is very interesting.

€2,000.01 - €100,000 or Sterling equivalent         2.5% Spread (Maximum of 1.25% either side)

I think that this means that if I transfer €100,000 to sterling and back again the following day, it will  cost me €2,500, assuming the actual exchange rate has not changed.

I have a UK current account and haven't gotten around to opening a deposit account. It would now make sense for me to open this account and transfer money from one to the other so that I can earn some interest.


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## Duke of Marmalade (10 May 2012)

UK deposit accounts are subject to the same 30% DIRT as Irish deposit accounts, it is an EU thing.

The 2.5K Forex round trip is enormous, so definitely do your forex somewhere else before opening a Nationwide £ account.  The rates aren't great but then UK deposit rates are very low in general.


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## Brendan Burgess (10 May 2012)

Duke of Marmalade said:


> The 2.5K Forex round trip is enormous, so definitely do your forex somewhere else before opening a Nationwide £ account.



Hi Duke

I had the impression that they were low compared to other banks, but I must be mistaken. It's the first time I had seen them displayed like this.


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## Duke of Marmalade (10 May 2012)

For that sort of money I have got around 0.2% each way (checking against Bloomberg on my iPhone right at the bank counter when they quote me the rate), possibly staff rates but still 1.25% seems way OTT.

BTW it should be noted that a Forex account is subject to CGT on any exchange gains. Okay, you get credit for losses but these can be very elusive to cash in. For someone with big carry forward CGT losses from, say, bank shares (e.g. moi) it is not really an issue. Using the Forex to buy goods rather than buy back the base currency does not escape capital gains tax though I suppose it would be a most scrupulous taxpayer who reported such transactions.

Finally, I know you have set out the various catastrophic risks which seems to obsess everyone these days but I think it would be helpful if you gave a sense of how likely you think these catastrophes might be.  I know people are really worried about these possibilities and I would hope that AAM could put a bit of perspective on the matter. To me there is almost zero chance of any time soon either Ireland leaving the euro, a recapitalised Irish bank collapsing or indeed UK Nationwide collapsing.

This could change but we will get plenty of warning. Look at Greece. The prospect of being dumped from the euro now looks non negligible, I guess most well to do Greeks have already fled their capital. But it has taken the looney left to gain real electoral power. Maybe by the next election our own looneys will have a similar result but plenty of time to escape before then.

Now a very real risk facing Irish depositors is the slow decline of the euro as a currency, and that is worth hedging against IMHO.


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## Lightning (10 May 2012)

It is greatly that Nationwide UK Ireland are openly displaying their FX margin spread. It is all to frequently a hidden charge. However, one is obviously best off using a 3rd party broker with a lower margin. 



> Is it the same as having a sterling savings account in the UK?



Largely yes. I guess the only difference is that Nationwide UK Ireland are subject to the laws of this country.


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## Brendan Burgess (11 May 2012)

Hi Duke

I have added the following to my response



> While the risk of these events are small, they should be considered. See Protecting your savings against a euro breakup






> Now a very real risk facing Irish depositors is the slow decline of the  euro as a currency, and that is worth hedging against IMHO.



Fancy doing a fuller post on "The risks facing depositors"?  Or will I do it and you can correct it ?  

Brendan
http://www.askaboutmoney.com/showthread.php?t=163133


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## Firefly (11 May 2012)

Duke of Marmalade said:


> UK deposit accounts are subject to the same 30% DIRT as Irish deposit accounts, it is an EU thing.
> 
> The 2.5K Forex round trip is enormous, so definitely do your forex somewhere else before opening a Nationwide £ account. The rates aren't great but then UK deposit rates are very low in general.


 
Hi Duke,

Can you tell me what you mean by the 2.5K Forex round trip? 

Thanks,
Firefly.


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## Duke of Marmalade (11 May 2012)

Firefly said:


> Hi Duke,
> 
> Can you tell me what you mean by the 2.5K Forex round trip?
> 
> ...


 
From the _Boss_:


			
				Boss said:
			
		

> I think that this means that if I transfer €100,000 to sterling and back again the following day, it will cost me €2,500, assuming the actual exchange rate has not changed.


One presumes that Nationwide are targetting Irish € deposits. Unfortunately that involves Forex (Foreign Exchange) transactional costs and Nationwide seem to be guiding 1.25% each way or 2.5% for the "round trip".

That is very high in my experience. What I recommend, if it is for this amount of money, you load the icurrencypad App onto your iphone. This gives regular updates on how currencies trade in the wholesale market. They change very often and by reasonably significant amounts. You should expect the bank teller to phone the currency desk. Check the quote with your latest App info. I got 0.17% difference just yesterday i.e. 80.00p when the App was saying 80.17. That was probably better than normal but I would have thought anything over .30 difference would be excessive and certainly 1.00 (i.e. 1.25%) would be extortionate!


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## Firefly (11 May 2012)

Thanks for that!


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## Duke of Marmalade (11 May 2012)

This is a welcome facility from Nationwide UK.  I found it nigh impossible to open a UK deposit account.  They wanted evidence of residence in UK and when told non-resident kept directing me to the Isle of Man.  IoM is no good because you pay higher rate tax on interest.

Nationwide's rates aren't great so I am plumping for the easy access account and hope that a bit of competition develops in this rather undeveloped space.


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## Firefly (11 May 2012)

Duke of Marmalade said:


> This is a welcome facility from Nationwide UK. I found it nigh impossible to open a UK deposit account. They wanted evidence of residence in UK and when told non-resident kept directing me to the Isle of Man. IoM is no good because you pay higher rate tax on interest.
> 
> Nationwide's rates aren't great so I am plumping for the easy access account and hope that a bit of competition develops in this rather undeveloped space.


 
As an existing customer I was able to open the STG account and make a transfer into it on the phone in about 5 minutes. The rates were 1% for the easy access, 1.25% for 6 months notice and 1.5% for 12 months notice....not being a huge difference I went with the easy access account.

One thing though...if euro went and we started using Punt Nua...would these deposits be converted too as Nationwide UK Ireland is still regulated by the Central Bank??


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## Duke of Marmalade (11 May 2012)

Firefly said:


> One thing though...if euro went and we started using Punt Nua...would these deposits be converted too as Nationwide UK Ireland is still regulated by the Central Bank??


These are such outlandish scenarios no-one can predict what would happen. On the face of it sterling deposits would be unaffected by a move to punt nua. But the circumstances in which that would happen would be so extreme they could pass any sort of law such as one which said that anybody who tried to duck this devaluation by moving into sterling must pay the difference. But I can't see any scenario where the sterling deposits themselves could be redenominated by an Irish government.


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## laois1 (11 May 2012)

Duke of marmalade - you mention that the IOM is no good as there is a higher rate of tax ? can anyone clarify exactly what the tax implications of an IOM account are ?


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## Duke of Marmalade (11 May 2012)

laois1 said:


> Duke of marmalade - you mention that the IOM is no good as there is a higher rate of tax ? can anyone clarify exactly what the tax implications of an IOM account are ?


The IoM is outside the EU and so there is no requirement for a level playing field.  Accordingly IoM interest is taxed as income and for a higher rate taxpayer that would be 41% plus PRSI and maybe even the USC but I am not sure of that.  Of course the tax is not deducted at source but is your obligation to disclose in your tax returns.


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## potnoodler (16 May 2012)

Set up the sterling easy access today paying 1% interest vs nearly 3% in the euro account , minimum amount is 10k gbp at a rate of .791 so costs €12,642, they said that's it no other commissions and when cross checked rate on nib app they were quoting .78 costing an extra €200.
Took 5 mins to set up account, but will wAit and see if going to use it


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