# Deposit Guarantee Scheme Will Expire on Dec. 31st 2011



## coloc (16 Nov 2011)

Hello

I've been reading an irish times article which seems to be suggesting the bank deposit guarantee scheme has been extended until December 2012?

The article isn't very clear, so was wondering if it's the scheme that is referenced under all the different accounts in the best buy threads in this forum area, which has it stated as only upto December 2011?

Can anyone confirm one way or other.

The article I refer to is on breaking news on the irish times site. (Am not allowed post urls as I'm below the post count where you're allowed do it)


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## ClubMan (17 Nov 2011)

Is this not clear enough?

http://www.rte.ie/news/2011/1116/guarantee-business.html

This is the scheme:

[broken link removed]


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## andycole (17 Nov 2011)

The Minister of Finance, Mr. Michael Noonan and the Irish Government have extendend the ELG Bank Guarantee Scheme until the end of 2012. Ok so this all sounds well and good. However..............

"_The extension will be subject to EU state aid approval every six months_."

There is no money in the Banks or the country at present to 100% guarantee any loss of savings or deposits in our Banks, just a EU Directive that states any sum of money up to €100,000 should be refunded. Actually I don't think this is part of Irish Law at present; rather its just a EU Directive which outlines a recommended course of action where Banking institions go bust.

My advice is to look to Denmark where any sums over the €100,000 experienced a 40% haircut (or was it 60%) in two Banking institutions which went bust. And use this a benchmark for what its worth.


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## kennyb3 (17 Nov 2011)

I wonder was this actually due ( i know it had to be done pr y/e but is this early?) yet or on the agenda? I would hazard a guess that it was done to try stop the capital flight out of Ireland which has picked up recently. Think 5bn left last month alone.


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## Lightning (17 Nov 2011)

If it is subject to EU approval every 6 months then how was Noonan able to extend it for 12 months?


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## Lightning (17 Nov 2011)

I don't think the deposit guarantee has been formally approved by the EU yet. 

The NTMA states that the deposit guarantee still expires on December 31st 2011:
[broken link removed]

The NCA states that the deposit guarantee still expires on December 31st 2011:
http://www.itsyourmoney.ie/index.jsp?p=125&n=757&a=´1144

I will not update the best buys until the NTMA confirm that the EU have approved the extension. I think Noonan was just announcing his intention to extend the guarantee.


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## andycole (18 Nov 2011)

CiaranT, 

I think this is the document which outlines the need for the Irish Government to seek approval every 6 months from the EU Commission regarding the necessary extension of the ELG Scheme?

From reading the first Introduction Paragraph the following point A says...

"_The authorisation was made conditional upon compliance with a number of specific_
_requirements including: a) a limited temporal scope of schemes, implying the need to obtain a_
_new Commission approval every six months on the basis of a review of a scheme's continued_
_justification and the potential for adjustments to the developments in financial market_​_functioning_"


" *THE APPLICATION OF STATE AID RULES TO GOVERNMENT GUARANTEE*
*SCHEMES COVERING BANK DEBT TO BE ISSUED AFTER 30 JUNE 2010".*

Link -http://ec.europa.eu/competition/state_aid/studies_reports/phase_out_bank_guarantees.pdf



I am not sure why the Irish Government and the Finance Minister, Mr. Michael Noonan has stated that he is seeking extension until the year end 2012. From my reading and understanding of the Bank Guarantee's within Europe, he can only obtain permission from the EU Commission to extend for a 6 month period rather than a 12 month period.


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## Lightning (18 Nov 2011)

Thanks AndyCole. 

It seems clear that Noonan has (1) not yet got approval for any extension and (2) can't get approval for 12 months. 

Was Noonan telling porkies to the media about an extension for 12 months that does not exist and can't happen. Seems so.


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## andycole (18 Nov 2011)

CiaranT,

I feel that the Finance Minister, Mr. Michael Noonan was probably trying to reassure people that their Deposits/Savings/Capital Lump Sums are 100% secure if deposited within the Irish Banking Institutions. Basically as mentioned above - a loss of Capital to other Non-Irish Banking Institutions  seems to be continuing.

Today Investec the Specialist Bank has advertised a new 18 month fixed term savings account for Irish Savers, with an attractive AER I think around 4.52%. Plus they also are offering a DKK Danish Kroner Savings Account I believe which has an expiry date early in December. 

Lastly the Irish Banks probably prefer long term deposits rather than "pesky" short term withdrawals, so that they can meet their capital funding requirements as required by the EU stress tests.......but its an improving savings environment for people who wish to save on a regular basis as well as long term savings.


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## Lightning (18 Nov 2011)

Absolutely, Noonan was 'trying to reassure' but this does not justify him making misleading/false statements about the bank guarantee. He was clearly trying to prevent any pre-December 31st deposit flight. One of the reasons for the huge deposit flight in September 2010 was the late extension of the bank guarantee. 

At the end of the day, I'm sure the EU will approve the deposit guarantee extension for 6 months soon. 

The EU have 5/6 weeks or so to act.


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## rosetube (28 Nov 2011)

I was speaking with ex banker/trader and told that guarantee is all very well but you *may take up to 5 years to get your money back* .... anyone know more about this??


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## Lightning (28 Nov 2011)

Under 5 weeks left for the guarantee to be extended and no news from Europe yet.


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## Pope John 11 (28 Nov 2011)

CiaranT said:


> Under 5 weeks left for the guarantee to be extended and no news from Europe yet.



I thought that this was in place, already. That previous mention of it on the news threw me off. Can anyone clarify that this guarantee is indeed not in place, and if so, when will the guarantee be in place,


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## Lightning (28 Nov 2011)

Pope John 11 said:


> I thought that this was in place, already. That previous mention of it on the news threw me off. Can anyone clarify that this guarantee is indeed not in place, and if so, when will the guarantee be in place,



Please read the full thread. 

Nonnan has only expressed his intention to extend it. 

As I said, it is clear that Noonan has (1) not yet got approval for any extension and (2) can't get approval for 12 months as it extends beyond the EU agreement.

When will it be in place? When the NTMA says that it is in place which will be when the EU and the DoF approve the extension. This might happen in late December or later unless they get their ass in gear.


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## Lightning (1 Dec 2011)

Today, the Dail have voted on a 6 month extension (not a 12 month extension that Noonan had indicated).

http://www.rte.ie/news/2011/1201/banks-business.html



> The Minister said the scheme would be subject to six-monthly EU Commission approval. He said approval has been sought and was expected to be given until June 30 2012.
> Mr Noonan told the Dáil the ECB had advised the Government that a further extension of the scheme would be beneficial, while the Central Bank and NTMA had also backed its continuation. The need for the extension of the scheme is beyond question, the Minister said.
> The institutions covered by the ELG scheme are: AIB, Bank of Ireland, Irish Life & Permanent and the IBRC (formerly Anglo Irish Bank and the Irish Nationwide Building Society) and their subsidiaries, including the EBS.



Next step is seeking EU approval.


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## Lightning (11 Dec 2011)

There are just 12 banking business days left before the Irish bank government guarantee (Eligible Liabilities Guarantee) expires. 

The EU need to get their figure out and act fast on the governments request for an extension to the guarantee. Further EU delay on a decision to approve or deny the deposit guarantee extension is only likely to cause deposits leaving the guaranteed banks.


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## Olivetti (15 Dec 2011)

*Government Deposit Guarantee*

One point on the guarantee scheme in the context of any break-up of or withdrawal from the Euro is gnawing at me.

If I have placed a deposit of €100,000 under the guarantee scheme, isn't the Irish government guaranteeing that I receive 100,000 *Euros* not 100,000 punts nua with a value of (probably) less than 100,000 Euros.

I realise this is probably a pointless question, because some way out of the obligation will be found, but I am surprised I haven't seen any commentary about it.

Could a depositor sue the State for the difference between his/her deposit in Euros and in punts nua if we devalue?


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## ryaner (15 Dec 2011)

Wouldn't your 100k Euro just change over the equal 100k Punt Nua, so in effect you haven't lost anything. Then the new Punt Nua devalues which is the same as when the Euro devalues now, again you haven't actually lost anything per say.

I think the only time it would make a difference is if/when a bank fails. If 100k Euro equals say 110k Punt Nua, then perhaps you'd be due 110k back instead of being limited to 100k max under the scheme.


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## Lightning (15 Dec 2011)

Olivetti said:


> One point on the guarantee scheme in the context of any break-up of or withdrawal from the Euro is gnawing at me.
> 
> If I have placed a deposit of €100,000 under the guarantee scheme, isn't the Irish government guaranteeing that I receive 100,000 *Euros* not 100,000 punts nua with a value of (probably) less than 100,000 Euros.
> 
> ...



The guarantee is not for 100,000 EUR, it is for an unlimited sum of money.

The NTMA are still saying that the guarantee has not been extended by the EU. Not much time left.


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## z107 (15 Dec 2011)

If this happens:


> If I have placed a deposit of €100,000 under the guarantee scheme, isn't the Irish government guaranteeing that I receive 100,000 Euros not 100,000 punts nua with a value of (probably) less than 100,000 Euros.



You would probably have to ask yourself where is the money going to come from?
The 'Guarantee' serves to give people a sense of security, and that's how it works. It stops a bank run. You decide if it's a false sense of security.


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## Lightning (20 Dec 2011)

The NTMA, who supervise the ELG, have finally, confirmed the extension of the ELG until June 30th 2012. I will update the best buys. 

The NTMA have also added rules around the option for un-guaranteed deposits here: [broken link removed]


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