# The Safest Irish Banks for Depositors



## burmo (15 Apr 2013)

Based on the Cyprus template, only deposits in insolvent banks were seized. Therefore, as a matter of being prudent I would like to try and establish what are the safest banks in Ireland for depositors.

I would to gather opinions and research and then update this thread as appropriate.

"Safe"
*Nationwide UK Ireland
* - They didn't do loans / mortgages in Ireland?
*Rabo 
* - 8 safest bank in the world in 2012 according to one report: 
http://www.gfmag.com/tools/best-banks/11661-worlds-50-safest-banks-april-2012.html#axzz2QWXh9xXy

Doubtful:
*Ulsterbank
* - Zerohedge voiced concerns, details to be released.
*KBC 
* - They have mortgages in Ireland, so strain from arrears?
[broken link removed]
 - Credit Ratings [broken link removed]
 - Moody's Downgrade June 2012 http://www.moodys.com/research/Moodys-downgrades-KBC-Bank-and-KBC-Group-outlook-stable--PR_248302

Bottom of the list:
*AIB *
 - SEC starting to investigate, http://www.independent.ie/irish-news/us-market-enforcer-issues-warning-to-aib-29194728.html
 - Zerohedge highlighted concerns
*BOI*
*PTSB*



*** 
2011 Bank Ratings
Below are the Standard and Poor’s long-term ratings for banks that are trading in Ireland as of February 2011.

*Institution* *Rating* 		 		 			 				RaboBank 			 				AAA 		 		 			 				Nationwide UK Ireland 			 				A+ 		 		 			 				National Irish Bank/Danske Bank 			 				A 		 		 			 				Northern Rock PLC 			 				A- 		 		 			 				Ulster Bank Ireland Ltd 			 				A- 		 		 			 				KBC Bank 			 				BBB+ 		 		 			 				EBS 			 				BBB- 		 		 			 				Irish Life and Permanent 			 				BBB- 		 		 			 				Bank of Ireland 			 				BB+ 		 		 			 				Allied Irish Bank 			 				BB 		 		 			 				Anglo Irish Bank 			 				B- 		 		 			 				_*Ireland*_ _*A-*_[broken link removed]

[broken link removed]


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## Jim2007 (15 Apr 2013)

There is no such thing as a safe bank and running around listening to talking heads, bloggers and rating agencies will not change that!

Since 2007 Swiss Bank UBS has seen $40b written of it's capital and more recently it discovered irregularities in it's London office which cost it about $5b more.  It was able to ride this out and survive for only one reason it's unusually high T1 ratio, yet you don't look at T1 ratios at all...  Applying T1 ratio rankings to your list would see your top ranked Nationwide fall to the bottom of the list while BOI who currently have one of the best T1 ratios around would move in to top position a head of Rabo and the top Swiss banks.  There is plenty of evidence around to suggest the T1 ratios are a good measure of a bank's strength and yet people continue to dump there savings into banks with low T1 ratios, no doubt if one of them fail they will suddenly learn all about T1 radios...

Spread your money around, diversity is the only way you can reduce risk.


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## Madangan (15 Apr 2013)

Given the reaction to the initial Cyprus deal i.e raiding Bank a/cs under €100,000 I think it very very unlikely there will be an attempt to repeat that either here or the UK.

For that reason I believe  that keeping under €100,000 in any account in those Banks is equally safe.

I personally wish I had the problem of worrying about larger sums :-(


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## dereko1969 (15 Apr 2013)

While it's a lovely little graph, including a February 2011 ranking is utterly pointless if you're trying to tell people what's going on now.


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## WizardDr (15 Apr 2013)

@burmo 

I think the first thing is €100k in each Irish registered bank is the level of deposit guarantee;

You will have to check the status of Rabo and UK Nationwide as the EU wide agreement on the deposit guarantee is unclear.

If your assets exceed €100k times the number of Banks - pay for the research.

The Anglo-Saxon view is that the Euro is collapsing since it began 11 years ago; the world was ending on several dates; the sun was coming up etc etc and even Cyprus has not brought the house down as it is discovered the Prime Minister was more concerned with large depositors than the ones under €100k. Also no Euro countries e.g. DENMARK - wiped bond holders and depositors and this was largely unreported by the Anglo Saxon brigade. Also bank collapses were a regular feature in the US prior to 1930s and what changed that was er..smaller banks. And here we have the Regulator destroying Credit Unions etc


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## burmo (16 Apr 2013)

Jim2007 said:


> There is no such thing as a safe bank and running around listening to talking heads, bloggers and rating agencies will not change that!
> 
> Since 2007 Swiss Bank UBS has seen $40b written of it's capital and more recently it discovered irregularities in it's London office which cost it about $5b more.  It was able to ride this out and survive for only one reason it's unusually high T1 ratio, yet you don't look at T1 ratios at all...  Applying T1 ratio rankings to your list would see your top ranked Nationwide fall to the bottom of the list while BOI who currently have one of the best T1 ratios around would move in to top position a head of Rabo and the top Swiss banks.  There is plenty of evidence around to suggest the T1 ratios are a good measure of a bank's strength and yet people continue to dump there savings into banks with low T1 ratios, no doubt if one of them fail they will suddenly learn all about T1 radios...
> 
> Spread your money around, diversity is the only way you can reduce risk.



Thank you for your insight. It is actually helpful to know that all the banks may be equally as unsafe.


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## burmo (16 Apr 2013)

WizardDr said:


> @burmo
> 
> I think the first thing is €100k in each Irish registered bank is the level of deposit guarantee;
> 
> ...



My concern is about the security of <100k euros in Irish banks. My understanding is that the 100k guarantee is only provided by the Irish state and there is no ECB mechanism underwriting it.

It looks like by 2015 they plan to make a common deposit insurance scheme across the EU and that this will be centrally funded by the ESM in case of problems: http://www.irishexaminer.com/business/savers-with-100k-to-lose-if-bank-fails-228253.html



> However, there will be a hierarchy of who loses money first, which  Internal Market Commissioner Michel Barnier listed as shareholders,  junior debt holders, senior debt holders, then depositors over €100,000  and then the [ESM] resolution fund.


But as was pointed out by the German Finance Minister, the 100k guarantee only applies if the state is still solvent: http://www.bloomberg.com/news/2013-...ens-european-plan-for-deposit-guarantees.html



> “It is very clear in the commission text that savers who are covered by deposit guarantee schemes, because they have deposited less that 100,000 euros, should be excluded from the scope of any bail-in,” said Vicky Ford, a U.K. Conservative member of the European Parliament who is working on the law.
> *Cyprus’s depositors aren’t covered by deposit guarantee rules because the state is insolvent*, German Finance Minister [broken link removed] said today on Deutschland Radio.
> “The media falsely created the impression that deposits are not safe in other countries,” Schaeuble said. *“They are safe, though only on the proviso that the states are solvent.” *



So that is why I'm trying to establish which Irish resident banks are the safest, because Ireland is certainly not solvent and the ~380 million euro in the Central Bank deposit reserve fund will not go far if it is needed.


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## dereko1969 (16 Apr 2013)

You're quoting Schaeuble from *before* the change was made to exclude those with less than €100k in the banks from the "tax" on savings. The decision to continue to protect those with €100,000 or less was made after that.


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## burmo (16 Apr 2013)

dereko1969 said:


> You're quoting Schaeuble from *before* the change was made to exclude those with less than €100k in the banks from the "tax" on savings. The decision to continue to protect those with €100,000 or less was made after that.



You are correct. But the statement I quoted is still correct. In that the Cyprus government would be loaned sufficient money to cover those deposits under 100k if they wanted to, which they did.


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## WizardDr (16 Apr 2013)

@burmo

The Germans actually wanted to protect the deposits under €100,000 and it was even speculated for six months in the markets about a bail-in of depositors.

As regards the banks all being equally unsafe - I think that may be reflective of the guff of bond salespersons who would suggest changing to $$ or Stg£ or SFF  etc - as with all these there are transaction costs. Anybody who moved to sterling would be nursing serious currency fluctuation losses if they had to reconvert.

In the EZ it seems to me that whilst there are arguments within the Troika as to to the approach in Cyprus, had we had a pragmatist like Noonan then this would not have happened.

As regards safety of banks, what we can say is that the dependency on short term deposits and then lending longer term such as mortgages, always creates a situation of instability if enough depositors simultaneously withdraw their money. It is a fault line that will be corrected when eventually life companies will fund mortgages.

If you had joined the flight to gold - you would be nursing even bigger losses.

As it stands, the €100,000 limit looks as good as it gets and what we will see is EC developing a proper EU wide scheme.

As to Government - the main correction is bringing insane spending in line with income, and that is a task twice the size of the banks.


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