# How safe are my deposit savings in Bank of Ireland?



## Itronoc (19 Apr 2011)

I have approximately 30,000 euro in Bank of Ireland savings accounts. It was my understanding that the Government guarantees savings up to 100,000 euro, so that even if BoI goes bust, I'll be OK.

I dont really understand, as various things I'm reading are now suggesting that my savings are actually not that safe, as there is a good chance that the State will go bust, not just the banks.

1) Is this true?

2)If this is true, what should I do? Take my money and put it in another bank which is not Irish?

An explanation/answer in plain English would be very welcome!

Thanks

Itronoc


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## Lightning (19 Apr 2011)

1) There is a very high probability of the state defaulting/restructuring our sovereign debt. 

2) Your decision. BoI are junk rated and dependent on the ECB and the state for ongoing support. There are certainly 'safer' options. 

What account do you have with BoI?


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## Paddyman (19 Apr 2011)

Again a very important post. Things seem to get worse on daily basis. No doubt the big savers have their money moved to safety.  We small savers don't want to to be at the mercy of a failed state. 
And what of Credit Union savers? Their money is deposited in banks and "safe" government bonds.

Can you give us an update of some of the best current "safer" options?


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## Itronoc (19 Apr 2011)

Thanks Ciaran T,

20,000 is in an 18 month lump sum deposit account and then 7500 is in 3 small regular savings accounts.

You say that "There is a very high probability of the state defaulting / restructuring our sovereign debt" CiaranT, so does that mean that I might be saved in any restructuring? 

But even if that's the case - why would I (and millions of others) take that risk? Shouldn't I just take my money out now? 

It would seem imprudent of me to leave money in an Irish bank?

Again though, I think I might be missing something


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## dockingtrade (19 Apr 2011)

THe idea of a depositor losing their money in the  euro zone when that depositors lender of last resort is the ecb is ludicrous.


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## joeryan (20 Apr 2011)

> THe idea of a depositor losing their money in the  euro zone when  that depositors lender of last resort is the ecb is ludicrous.



Does that mean our money is safe in BOI/AIB or not?


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## bugler (20 Apr 2011)

dockingtrade said:


> THe idea of a depositor losing their money in the  euro zone when that depositors lender of last resort is the ecb is ludicrous.



Here are more ludicrous ideas, from the vault:

1. Property prices falling.
2. An Irish bank failing.
3. The IMF coming to Ireland.

etc...


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## Paddyman (20 Apr 2011)

CiaranT said:


> 1) There is a very high probability of the state defaulting/restructuring our sovereign debt.
> 
> 2) Your decision. BoI are junk rated and dependent on the ECB and the state for ongoing support. There are certainly 'safer' options.
> 
> What account do you have with BoI?



To get back to the original queston, what are the "safer" options?


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## UFC (20 Apr 2011)

Paddyman said:


> To get back to the original queston, what are the "safer" options?



The way I am calculating it is where are people likely to transfer their money if things get worse? They have to put their money somewhere.

IMO most people are not sophisticated enough to buy gold or silver or invest in stable companies, so it is likely they will just transfer it into whatever is assumed to be a "safe" bank. IMO this is probably Rabo.


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## Lightning (20 Apr 2011)

Paddyman said:


> To get back to the original queston, what are the "safer" options?



AAA rated banks like Rabo. 
Banks with AAA parents like Northern Rock. 
UK Guaranteed banks like Nationwide UK.


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## Paddyman (20 Apr 2011)

Many Thanks Ciaran!

Just one small query. Is National Irish Bank still a safe option?


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## Troy McClure (20 Apr 2011)

NIB are safer. Danish bank guarantee.

Ciaran, I love the way we still quote ratings agencies, even though they have consistently got it wrong through all this mess and are completely unregulated. In my mind they are an elephant in the room as to the fundamental problems world economies are experiencing. They are a big part of the problem.


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## Marc (20 Apr 2011)

http://www.askaboutmoney.com/showthread.php?p=1144730#post1144730p

There are no winners in a run on the banking system you just transfer a banking crisis into a sovereign debt crisis.

The risk is held by all of us in society it isn't possible to gain from closing your bank of Ireland account. The bank will fail it will be nationalised and you will pay for it through taxation.


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## dockingtrade (21 Apr 2011)

bugler said:


> Here are more ludicrous ideas, from the vault:
> 
> 1. Property prices falling.
> 2. An Irish bank failing.
> ...



BAnks have failed they are bust , deposits are un touched they are being supported by the euro currency central bank this is nothing to do with bailout money . The ecb is doing its job. Outside of fundamental s just think for a second what would happen if depositors took a hit in the euro zone. The biggest losers would be France and Germany


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## bryanod (21 Apr 2011)

Of course you could also be faced with the scenario where all Irish Nationals accounts were frozen within the Eurozone and put into Punt Nua if there was any problem so Rabo wouldn't save you from that.

Basically, nobody really knows despite the millions of econmic experts in the country.


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## Duke of Marmalade (21 Apr 2011)

bryanod said:


> Of course you could also be faced with the scenario where all Irish Nationals accounts were frozen within the Eurozone and put into Punt Nua if there was any problem so Rabo wouldn't save you from that.
> 
> Basically, nobody really knows despite the millions of econmic experts in the country.


I have some sympathy with this viewpoint. In the extremely unlikely Armageddon that is being envisaged I cannot see a situation whereby you escape simply because you moved your deposits to Rabo or indeed to some bank located externally. We are probably talking about some confiscation or wealth tax and no way will people escape simply because they withdrew funds from Irish banks. In any case I believe your 30K is as safe as houses


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## UFC (21 Apr 2011)

The EU are not going to freeze people's bank accounts. They will use quantitative easing to devalue the currency and inflate away the debt.

However the Irish government could possibly freeze people's bank accounts. This is highly unlikely but it is possible. In that case you want to have your money outside Ireland. As you probably know, you can't transfer money from Rabo -> Abroad. You have to transfer it from Rabo -> Ireland.


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## SemperFi (21 Apr 2011)

UFC said:


> The EU are not going to freeze people's bank accounts. They will use quantitative easing to devalue the currency and inflate away the debt.



UFC Can you explain this in a little more detail? cheers.


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## UFC (21 Apr 2011)

SemperFi said:


> UFC Can you explain this in a little more detail? cheers.



Look what's happening in the US at the moment. They are using quantitative easing (i.e. printing money) to increase the circulation of money. This has a number of effects, three of the big ones being a) a devaluation of the currency hence a devaluation of all debt and b) increased money supply which means high inflation and lots of money to buy things like stocks and commodities and c) cheap exports.

So the US economy is in big trouble, but because of quantitative easing they are able to print their own money to buy their own debt. Example: the US treasury needs money so they offer some bond at x%. No foreign investors want to buy the bond so the federal reserve prints loads of money and buys it themselves. In effect this mean the US is able to borrow money from itself and can never go bankrupt. However this sort of nonsense makes imports very expensive, dilutes the value of people's savings, and really does put the county at risk of hyperinflation (e.g. if China decides to dump all their dollars because they can see its value is being inflated away, this will cause a huge surge in the dollar supply which will drastically push up prices due to more money competing for the same items). Hyperinflation is what happened in Zimbabwe -- a loaf of bread costing one billion dollars.

The ECB can do something similar. Let's say for example Ireland decides to default on the money the ECB have lent us. The ECB can simply print more money. There is no need to freeze people's bank accounts and take their money because they can print it out of thin air. (You can only do this with 'fiat money'; if we were a prudent continent we would have backed the euro with gold to ensure it is a stable currency (i.e. its supply is limited) and has genuine value).

I'm rambling, but in a nutshell I am trying to say the ECB can print money to get itself out of any problem, so they don't need to freeze out bank accounts and take our money. They can just print more of it. The risk of all this is hyperinflation but a lot of economists don't think it is likely to happen.

Ireland can't do this by the way -- we aren't supposed to print euros -- so in theory our government could freeze our bank accounts. 

Note I am not an economist, I just love economics!


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## Duke of Marmalade (21 Apr 2011)

Of course inflation (or currency depreciation) reduces the real value of debts. This is simply a transfer of resources from the lenders to the borrowers. Governments tend to be borrowers and so might be tempted by a bit of inflation. But when it comes to the ECB what incentive does it have to transfer resources from lenders to borrowers? Why should it transfer wealth from fiscally prudent northern Europeans to profligate PIIGS?


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## UFC (21 Apr 2011)

Well the point I am trying to make is that the ECB will simply print more money when it needs it. It doesn't need to freeze people's bank accounts or take their savings. It can generate money at the touch of a button.


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## bazwaldo (22 Apr 2011)

After looking at the key posts and best rates, I was tempted to open a double your interest and take some funds out of NationwideUK Ireland. 4.5% vs 3% going by todays rates.

Then after reading the many posts about Ireland going bust etc etc and moving money out of Ireland it struck me that if everyone with savings moves their well earned (in most cases) dosh to a foreign bank, won't that really make the banking situation worse. If the Irish Banks have no deposits then isn't it inevitable that the banks and Ireland go bust?

If this is the case, should there be a call for people to try save Ireland and if we all do so then we can get out of this mess?

By the way, the banking bailout boils my blood and would love to see some heads rolling for the way banks throw money at people who never stood a chance of paying it back. I heard there is some huge amount of money saved by people in Ireland and getting that circulating in Ireland would get things moving here.

Or am I completely wrong?


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## Lightning (22 Apr 2011)

bazwaldo said:


> If the Irish Banks have no deposits then isn't it inevitable that the banks and Ireland go bust?



Irish banks have already lost a huge percentage of their deposits. The ECB and CBI have stepped in and provided emergency liquidity to the tune of 140 billion EUR. 



bazwaldo said:


> If this is the case, should there be a call for people to try save Ireland and if we all do so then we can get out of this mess?



Patriotism versus risk ... risk versus patriotism ... there is a thread on this somewhere.


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## Lamorna (25 Apr 2011)

Hi,
I've worked at Bank of Ireland and I wouldn't touch them with a bargepole. Most of the managers did not know what they were doing. They prepared nice spreadsheets and presentations so that their department would look good on paper, but in the reality it was a big mess. Lost paperwork (deeds of ownerships), refunds (when the bank was owing money) processed at least 1 month late...
Last year, one of our clients closed his account with BoI: they agreed to send the money by direct credit to his UK bank account... and sent him a cheque! He cashed the cheque into his UK current account and proceeded to write a cheque, drawn from that account, to invest the proceeds. The BoI cheque bounced... and of course do did the cheque he had written! It took him about a fortnight of phone calls and complaint letters to eventually get the hands on his money!
I don't know how BoI managed it. Where I worked, one of the bank accounts we use for payments by BACS (direct credit) once went into overdraft by £45 million, because one of my colleagues had done a typo. The payments went off all right, despite the fact that we did not have enough funds in the account!
My guess is that if some of BoI's cheques bounce, their solvency is not held in high regard.


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## gussy (27 Apr 2011)

*an post*

Lads, on year one of my account I got interest added to my account. I was quite please with amount no dirt etc, I am one who is braving it and keeping my account in ireland. Yes things might go sour and I certainly hope not but if we keep talking ourselves down and indeed take our money out of the country then it might be on the way to default. There are better interest rates here for your money and if you all decided to bring the money home then you are supporting your country and your childrens future. I understand the fear and hope for the best but we all have to play our part in saving this country. Not easy to say as I have recently lost my job and hoping for a future even at over 50. Best of luck to us all anyway


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