# Should I reinvest with Northern Rock?



## sherib (26 Oct 2007)

Yesterday I received a letter from N.R. inviting reinvestment. The letter said that "_N.R._ _has agreed an extension of the guarantee arrangements provided by the Bank of England and HM Treasury....This includes all deposits held in N.R. Ireland."_

I left the account open but transferred most of my savings to Rabo which, as everyone knows, pays less interest on the balance when it exceeds €10,000. I am very tempted to reinvest with N.R. since I wouldn't lose the interest which would have accrued during the period since withdrawal. Has anyone any advice or comments? If so, much appreciated.


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## TSThomas (26 Oct 2007)

Can't speak for others here but I didn't withdraw anything during the run, so I'm certainly content enough for now sticking with them - although I don't require immediate access / availability to my NR savings in the event things were to go bad (again). The guarantee won't last forever either of course. 

I'll definitely be keeping an eye on what Rabodirect does after Christmas though; what with their 5% on first €10000 expiring.


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## ClubMan (26 Oct 2007)

If you do reinvest with _NR _before October 31st then they will credit your account with the interest that you would have lost out on if you meet certain conditions.


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## Dman (26 Oct 2007)

I wasn't aware Robo's 5% interest on the first €10K is expiring at the end of year? 
I just thought that was the rate they paid to all saving accounts up to 10K.


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## ClubMan (26 Oct 2007)

[broken link removed]


> 5.0%* Variable CAR. DIRT deductible on total balances up to €10,000.
> 3.75%** Variable CAR.  DIRT deductible on balances from €10, 000 up to €1 million.
> Rates effective from 12.03.07 to 31.12.07. Standard variable rate applies thereafter.


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## Dman (26 Oct 2007)

Cool tks.


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## Squonk (26 Oct 2007)

I see NR has borrowed £20 Billion thus far from the Bank of England and shows no signs of slowing down. The quicker NR gets bought the better...
http://politics.guardian.co.uk/economics/story/0,,2199683,00.html


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## jpd (26 Oct 2007)

Totally agree.


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## carpedeum (26 Oct 2007)

I have reinvested. 

I got quite annoyed with BOI, where I stuck my NR withdrawl into a current account. BOI offered me nothing to compare with rabo or NR or First Active's E-saving a/c, but, implied that they were a safer bet than NR or Rabo. I have been working since 1977 and remember how the established banks used to treat us when the cartel operated! I just hope NR get their act together, so that competition can be resumed. Branson may be the man to do it. The likes of BOI, AIB, etc have no right to get on their moral high horses after what's being exposed in their dealings with the two solicitors (Byrne and Lynn)! Greed is good? Taxes are for little people?


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## sherib (27 Oct 2007)

Thanks for replies and encouragement. I went ahead and reinvested in N.R.


> Originally Posted by *Carpedeum*
> _BOI, AIB, etc have no right to get on their moral high horses after what's being exposed in their dealings with the two solicitors (Byrne and Lynn)! Greed is good? Taxes are for little people?_


Couldn't agree more. The majority of ordinary people repay their loans with interest++ but its the big borrowers who seem to command more respect and I can't imagine why this is. I sincerely hope it will be the Banks that suffer any losses as a result of those professionals' behaviour. They seem to come down like a ton of bricks on the ordinary punter who gets into trouble with the mortgage.


> Originally Posted by *ClubMan*
> _If you do reinvest with NR before October 31st then they will credit your account with the interest that you would have lost out on if you meet certain conditions. _


Yes, I realize that. I'll just about make the deadline of 31st October as I didn't transfer electronically till after noon today and this being a Bank Hol weekend N.R. won't get the funds till 30th at the earliest.


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## rmelly (27 Oct 2007)

I've noticed that there are a few posters on this site that go out of their way to undermine Rabodirect in particular raising questions on regulation & stability (deby rating), even their online security.

To these guys, I'd recommend doing a search for "AIB ICI"

e.g. 

http://en.wikipedia.org/wiki/Allied_Irish_Banks#Controversy

[broken link removed]

There aren't too many banks that can lay claim to having been bailed out by the Irish tax payer.


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## sherib (27 Oct 2007)

There's a very encouraging reply by Dominic Coyle to a reader's question in Friday's Irish Times. According to him _*Northern Rock*_ "_currently ranks as the safest financial institution in these islands in which to invest your money"._ He further wrote that "_no Irish bank including Rabobank is exposed the way that N.R. was." _

While with Irish banks only the first €22,222 is covered, (maximum compensation of €20,000), in the Netherlands where _*Rabo*_ is registered, the first €20,000 is guaranteed 100% with 90% of the next €20,000 similarly covered. He also wrote that after N.R., the chancellor of the exchequer said he would guarantee 100% of the first £35,000 saved. I'm not sure but presume that means the Euro equivalent.

I wasn't aware of any posters on this thread or on AAM undermining _Rabobank_ especially since it is one of the largest financial institutions in the Netherlands. I went back to N.R. because _Rabo's _savings rate is only 3.75% after deposits of €10,000 and of course that amount is still with _Rabo._


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## ClubMan (27 Oct 2007)

sherib said:


> Yes, I realize that. I'll just about make the deadline of 31st October as I didn't transfer electronically till after noon today and this being a Bank Hol weekend N.R. won't get the funds till 30th at the earliest.


What about doing a same day transfer (there may be a charge for this), writing a cheque and dropping it in, etc.?


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## ClubMan (27 Oct 2007)

rmelly said:


> I've noticed that there are a few posters on this site that go out of their way to undermine Rabodirect in particular raising questions on regulation & stability (deby rating), even their online security.


I  haven't noticed any such trend.


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## ninsaga (28 Oct 2007)

With regard to reinvesting......... well what annoys me most about NR now is the 'We're Open' on their web page... yet I am still having major difficulties trying to log into my account most of the time.


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## ClubMan (28 Oct 2007)

I haven't any problems that I didn't have before the recent kerfuffle - i.e. usually a very long delay getting through one or more of the login security question screens before getting into the account proper.


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## Sunny (28 Oct 2007)

rmelly said:


> I've noticed that there are a few posters on this site that go out of their way to undermine Rabodirect in particular raising questions on regulation & stability (deby rating), even their online security.


 
Where did you see that? I have seen people ask since Robo and Northern Rock have the same kind of online operation in this country which is fair enough. Never noticed some kind of anti Rabo bias


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## ninsaga (28 Oct 2007)

I have not managed to get in for a couple of weeks.... when I get to the security question I get " We regret that this service is currently unavailable. Please try again later, or telephone our administration office on (01) 480 6050 for further assistance. Opening hours 09.00am - 17.00pm (GMT) Mon - Fri"

ninsaga


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## sherib (28 Oct 2007)

> Originally Posted by *ClubMan*
> _What about doing a same day transfer (there may be a charge for this), writing a cheque and dropping it in, etc.?_


I couldn't do that since _Rabobank_ don't offer that facility - _Northern Rock_ does which is very handy. It's irrelevant now since the money is hovering in cyberspace since Friday. If I'd used the cheque route I'd still have had to transfer to AIB first so it was easier to do a direct electronic transfer to N.R. In any event _Rabo's_ address is a PO Box No. so where would one drop it in? 

AFAIK and to the credit of both _Rabo _and _Northern Rock _there is no limit on the amount that can be transferred daily, unlike _AIB _where there's a limit of €5,000 daily that can be transferred electronically. That seems to be a smart rule by _AIB_ allowing them to hold onto one's money a little longer - especially when multiplied by thousands.

It is a bit slow getting into my N.R. account but I have never failed to get it when I wait a while after each of the Qs.


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## ClubMan (29 Oct 2007)

Sorry - I overlooked the fact that you were transferring from _Rabo_. Do they not have any way to get your hands on your own cash faster than that? As an account holder I should know but I don't!


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## Jethro Tull (31 Oct 2007)

ninsaga said:


> With regard to reinvesting......... well what annoys me most about NR now is the 'We're Open' on their web page... yet I am still having major difficulties trying to log into my account most of the time.


 
Yeah, despite the problems experienced during the 'run' there seems to have been absolutely no improvement made to the workings of their website. I have money in Rabo for easy access and just about the rest of my cash in an anglo 30 day notice account which also pays 4.5%


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## ClubMan (31 Oct 2007)

There is no disimprovement over how it was before the run either though - at least in my experience. Slow login process as ever but OK once you get in.


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## Sailor (1 Nov 2007)

I agree. Their site is working exactly as it was before. It was always slow, but reliable. Also i transferred money to it electronically from my clearing bank, and showed up exactly on the second day, which was good to gain the interest back to September 14th.


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## dxhound2003 (4 Nov 2007)

Even though I did not withdraw any savings during the crisis I got two of these letters (asking me to reinvest if I had withdrawn savings) from NR about a month apart. 

Looks like they wrote to everybody which seem like a waste of money to me when they should be trying to reduce costs. I e mailed them about it 26 Oct but got no reply.


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## ClubMan (5 Nov 2007)

Maybe it would have cost them more to trawl through the customer database to target only those who had withdrawn money?


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## dxhound2003 (5 Nov 2007)

I thought about that and I asked them about it in the e mail but like I say they did not reply. 

This might seem like a petty issue to some people talking about postage and printing etc for unnecessary letters but I think they should be trying to save money wherever they can at the moment. If I get a reply from them I will post the details here.


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## ClubMan (5 Nov 2007)

You might be better of writing to them. I find that many companies don't bother answering emails but they do answer letters. If you're really concerned about this then you should consider buying at least one share in the company so that you can make your views known at a company general meeting.


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## dxhound2003 (10 Nov 2007)

Anyone watch the BBC2 Money Programme (7pm 9/11/07) Northern Rock, Northern Crock. Didn't make for pretty viewing. One thing they said is that there probably has been a "silent" run on the bank since the crisis with a lot of people taking their money out. Mine is still in there.

http://news.bbc.co.uk/2/hi/business/7086473.stm


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## Gautama (12 Nov 2007)

Personally, I split my money to amounts less than €20k. Put these groupings into new accounts.
First Active and Ulster Bank are giving great rates at present.


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## ClubMan (12 Nov 2007)

Gautama said:


> Personally, I split my money to amounts less than €20k. Put these groupings into new accounts.


The _UK _compensation scheme guarantees a lot more than €20K. Something like €45K if I recall correctly.


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## Nemesis (13 Nov 2007)

Yes, and what's more, the UK scheme covers 100% up to that amount for each different banking group. Unfortunately, our deposit protection scheme doesn't. So it makes no difference whether one deposits amounts of €20k among different banks, you're only covered for the same amount no matter how many banks you hold accounts with. It's really inadequate when you look at the UK and Dutch schemes. Doesn't look like it's going to be improved any time soon either.


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## Sunny (13 Nov 2007)

Nemesis said:


> Yes, and what's more, the UK scheme covers 100% up to that amount for each different banking group. Unfortunately, our deposit protection scheme doesn't. So it makes no difference whether one deposits amounts of €20k among different banks, you're only covered for the same amount no matter how many banks you hold accounts with. It's really inadequate when you look at the UK and Dutch schemes. Doesn't look like it's going to be improved any time soon either.


 
Are you sure? That doesn't make any sense. If I have €20,000 in both AIB and BOI and both go bust I must be covered for both.


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## Godfather (13 Nov 2007)

Sunny said:


> Are you sure? That doesn't make any sense. If I have €20,000 in both AIB and BOI and both go bust I must be covered for both.


 
I agree with Sunny...


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## Nemesis (13 Nov 2007)

Sunny said:


> Are you sure? That doesn't make any sense. If I have €20,000 in both AIB and BOI and both go bust I must be covered for both.



It's my understanding from the posts I've read here in the past that you're not. Though after searching the forum for a bit I must admit I'm finding it hard to track them down. The Financial Regulator isn't much help either as it doesn't explicitly state what the position is regarding accounts with different institutions.



> The maximum amount you can get under the schedule is 90% of all deposits subject to a maximum compensation payment of €20,000.
> 
> This means that that even if you have an amount greater than €20,000 in your deposit - for example €45,000 - you will only be entitled to a maximum of €20,000.



In the absence of this information, I would read 'all deposits' as being just that - all deposits with all banks. One can't just assume it applies to each different bank. If you look at the UK scheme it states:



> *What is the position for people who have multiple accounts with banks that are subsidiaries of another bank?*
> 
> We have received some enquiries about how we would apply the compensation limits to people who hold multiple accounts in banks that are part of a larger group such as Halifax Bank of Scotland. If each of the banks is separately authorised by the Financial Services Authority:
> 
> ...



If someone can provide information which proves my interpretation is wrong, I'd be happy to see it. It's important to get a definitive answer on this issue.


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## Godfather (13 Nov 2007)

Hey guys,

from the financial regulator:
*Compensation limits* 
The maximum amount you can get under the schedule is 90% of all deposits subject to a maximum compensation payment of €20,000. 

..."All deposits"??? My God Nemesis is right!!!


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## TSThomas (13 Nov 2007)

Calm down; don't want to start a run on several Irish banks


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## Godfather (13 Nov 2007)

Please give me more accurate words of reassurance...


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## Sunny (13 Nov 2007)

Godfather said:


> Hey guys,
> 
> from the financial regulator:
> *Compensation limits*
> ...


 
I presume it is 90% of all deposits within one institution if you have more than one account. Doesn't make sense otherwise

I will try and find some confirmation


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## rob30 (13 Nov 2007)

Godfather said:


> Hey guys,
> 
> from the financial regulator:
> *Compensation limits*
> ...


 
So, would it make sense to have 1 irish, 1 dutch ( Rabo), 1 danish (NIB) and 1 british ( halifax or NR) savings account then, so that each tranche is covered by a different government insurance scheme?


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## Nemesis (13 Nov 2007)

Sunny said:


> I presume it is 90% of all deposits within one institution if you have more than one account. Doesn't make sense otherwise
> 
> I will try and find some confirmation



I agree. It doesn't make sense and it certainly should be 90% (100% even) of all deposits within one institution but that doesn't mean that it is the case. Like I said, this has come up before and although there were differing opinions, it's my recollection that the final conclusion was always it applied to all deposits in all institutions. But perhaps we never arrived at a truly definitive answer and weren't overly concerned (This was before we came to realise that deposits might not be totally secure).



rob30 said:


> So, would it make sense to have 1 irish, 1 dutch ( Rabo), 1 danish (NIB) and 1 british ( halifax or NR) savings account then, so that each tranche is covered by a different government insurance scheme?



Not a bad idea in these uncertain times.


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## Nemesis (13 Nov 2007)

Just looking at this page again. If you read the section on compensation limits for the Investor Compensation Scheme, it wouldn't exactly fill you with confidence for the Deposit Protection Scheme. No mention of each individual institution here either.



> There are limits to the amount of money you can claim, so if you have a large investment you may not be fully protected with this scheme.  The ICCL can pay up to 90% of the amount you lost, subject to a maximum of €20,000 *for each investor*.
> 
> For example, if your investment loss was €10,000, you would be entitled to compensation of €9,000 or 90 per cent of the amount lost. If you invested €30,000, you would receive the maximum compensation of €20,000, even though that is just 67 per cent of your loss.


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## jpd (13 Nov 2007)

You could always kept a safe under your bed filled with euros (or even gold!)

Banking was, is and always will be based on trust and if trust goes out the window, then a safe under the bed it is. It is up to each and all to decide on how much trust they accord to Bank of Ireland, Allied Irish, etc etc Unfortunately, the modern economy would not function well, if at all, if no one trusted the banking system and we would be reduced to a cash economy and bartering. In this case, no one could buy a home, start a business, purchase a car, ...


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## Nemesis (13 Nov 2007)

That really isn't the issue here. It's about how miserable our deposit protection scheme is compared to others. It's not unreasonable to criticise it or make people aware just how inadequate it is. If an Irish bank did get into trouble or go bust, the inadequacies in the deposit protection scheme could fuel panic and cause a run to spread. The UK authorities recognise this and have amended the scheme to cover 100% up to £35,000 plus new legislation next year to make the compensation payable within days not months. I guess it's going to take Irish depositors to lose money (very unlikely, but not impossible) before the scheme is improved here.


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## jpd (14 Nov 2007)

I think it is the point - if all the deposits of all depositors are guaranteed by the state, then obviously the banking system would be completely run by get rich quick merchants. 

If no deposits were guaranteed, then obviously people would be very carefull whom they deposited their cash with and there would be a clear risk(perceived risk?)/reward structure in interest rates

Instead, we argue over what is a "reasonable" level of protection to afford to retail investors. I'm not sure that setting this amount above what it already is would bring any more benefits. It MIGHT have avoided a run such as N. Rock but at a cost of inefficent and un-economic banking à la N. Rock where the management obviously (with hindsight) overlooked proper risk management and the FSA/Bank of England failed in the duty of oversight and control.


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## Godfather (14 Nov 2007)

Hi guys,

so correct me if I'm wrong but Postbank and Rabo seem the most secure places to keep the savings or am I wrong?


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## Nemesis (14 Nov 2007)

jpd said:


> I think it is the point - if all the deposits of all depositors are guaranteed by the state, then obviously the banking system would be completely run by get rich quick merchants.
> 
> If no deposits were guaranteed, then obviously people would be very carefull whom they deposited their cash with and there would be a clear risk(perceived risk?)/reward structure in interest rates
> 
> Instead, we argue over what is a "reasonable" level of protection to afford to retail investors. I'm not sure that setting this amount above what it already is would bring any more benefits. It MIGHT have avoided a run such as N. Rock but at a cost of inefficent and un-economic banking à la N. Rock where the management obviously (with hindsight) overlooked proper risk management and the FSA/Bank of England failed in the duty of oversight and control.



So you're extending this moral hazard idea to all ordinary retail depositors. If a bank goes bust and pensioners lose a large chunk of their life savings then tough, they should have checked out all the ratings for the bank provided by the different agencies, conducted detailed research into the bank's business model and management perhaps. We're not talking about a blanket guarantee for all deposits here. No one is arguing for limitless protection of all deposits by the state. But €20,000 is not a large sum for ordinary depositors today, particularly the older generation who tend to keep a large proportion of their wealth on deposit. 

You're not going to get a banking system 'completely run by get rich quick merchants' by having a system of deposit protection here equivalent to the UK scheme. Businesses, institutions and very wealthy individuals with very large amounts on deposit will still have to exercise care in where they place their funds.


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## Nemesis (14 Nov 2007)

Godfather said:


> Hi guys,
> 
> so correct me if I'm wrong but Postbank and Rabo seem the most secure places to keep the savings or am I wrong?



Godfather, I don't want to provoke alarm or make people anxious about their savings with this discussion. I don't think there's any reason for people to make sudden decisions about where they place their savings. But for someone who is concerned about this, it might provide peace of mind to spread their deposits among different banks that are covered by different deposit protection schemes. Postbank and Rabo do look like good options for someone for whom security is paramount. NR has actually the best guarantee at the moment but I appreciate for some people that's not something they'd feel comfortable with after their recent experience.


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## Godfather (14 Nov 2007)

Nemesis said:


> If a bank goes bust and pensioners lose a large chunk of their life savings then tough, they should have checked out all the ratings for the bank provided by the different agencies, conducted detailed research into the bank's business model and management perhaps.


 
Hi Nemesis, sorry I'm a nervous saver I admit it... One last question pls: do you know with which agencies I could check the banks ratings for free please?


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## Sunny (14 Nov 2007)

Godfather said:


> Hi Nemesis, sorry I'm a nervous saver I admit it... One last question pls: do you know with which agencies I could check the banks ratings for free please?


 
Moodys, S&P and Fitch will all provide ratings for free but you won't get access to detailed research and to be honest it won't tell you much. All the Irish banks are highly rated and you need to understand the rating methodology or else a rating of Aa3 or P-1 will mean nothing to you. Try www.standardandpoors.com (not sure if they will have anything)

I really wouldn't be having sleepless nights about your savings in Irish banks if I was you


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## Godfather (14 Nov 2007)

Sunny said:


> I really wouldn't be having sleepless nights about your savings in Irish banks if I was you


 
Thank you v. much Sunny!!!


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