# Specific question about our deposits in the event of Irish catastrophic default.



## TomPetty (10 Apr 2011)

Hi all, 
I have a Specific question about our deposits in the event of catastrophic default. 

If I have 120,000 in an Irish Bank for example PTSB ( 100,000 covered by Irish Deposit scheme ) 

and 

If I have 120,000 in an English bank resident here in Ireland for example Nationwide UK ( 100,000 covered by UK Deposit scheme ) 

What my question is, In the event of catastrophic / non planned Irish default, I would be interested in hearing what your thoughts are, with regards to above 2 scenarios. 

Would we loose just the amounts above whats guarenteed ? ie 20,000 ? 

If all Irish accounts were frozen, would this apply to both scanarios above ? 
IF 30 % of all deposits were taken from each account holder, would this apply to both scenarios above also ?  
etc etc etc ....

Many thanks for your thoughts all. 

Tom.


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## Slim (12 Apr 2011)

TomPetty said:


> Hi all,
> I have a Specific question about our deposits in the event of catastrophic default.
> 
> If I have 120,000 in an Irish Bank for example PTSB ( 100,000 covered by Irish Deposit scheme )
> ...


 
AFAIK - if your acount is in your sole name, you stand to lose just €20k in Irish bank. In UK bank operating in Ireland, I think the maximum cover is 50k, so you have about €65k at risk, depending on exchange rate.

As for seizing of deposits, this is unimaginable , in my view, so I couldn't speculate on that. Hope it does not happen though. Slim


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## Gervan (12 Apr 2011)

The UK banks now cover up to €100,000 too. ( About £85,000). So no difference in the guarantee, just your perception of how likely each is to fail


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## TomPetty (12 Apr 2011)

Thanks guys, but what are your thoughts on what will happen our deposits in the the two different scenarios - ie Deposits in an Irish Bank versus deposits in an English Bank resident in Ireland ?


For example, in an Irish doomsday scenario, do you anticipate loosing all deposits in Irish Banks, but not in the English Banks resident in Ireland ? Or will it be a wipe out across the board ? 

Your thoughts ? 

Many thanks Tom.


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## coin (12 Apr 2011)

The currency would have to be devalued back to the punt I would imagine? If so the government could freeze savings account in UK banks operating here until you agree to take out funds in punts and face the devaluation.


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## TomPetty (13 Apr 2011)

coin said:


> The currency would have to be devalued back to the punt I would imagine? If so the government could freeze savings account in UK banks operating here until you agree to take out funds in punts and face the devaluation.




Good point Coin - I guess the only way to avoid this scenario, would be to move savings off shore - The main downside I see with this, is drawing attention to yourself, from a Revenue perspective  (when paying your Dirt), resulting in possible audit and reems of paperwork !!


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## sartay (14 Apr 2011)

Can anyone tell me what the possible outcomes may be if the Irish government can't actually afford to repay the amounts that are theoretically protected? e.g. if I had €100,000 in an Irish bank that went bust and the Irish government also pretty much were bust and couldn't repay me the €100,000.

How likely is this scenario?

And is there a kind of second layer of protection offered from the EU in this case? i.e. would the EU then repay me the €100,000? Or are they under no obligation to do this?

I'm just wondering if we are relying solely on the Irish government to protect our funds in the event of Irish banks going down?


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## Chris (14 Apr 2011)

sartay said:


> Can anyone tell me what the possible outcomes may be if the Irish government can't actually afford to repay the amounts that are theoretically protected? e.g. if I had €100,000 in an Irish bank that went bust and the Irish government also pretty much were bust and couldn't repay me the €100,000.
> 
> How likely is this scenario?


This scenario is already the case. The state cannot pay for its budget deficit and bank bailout. It would certainly not be able to afford to pay for the guarantee if it were called upon.



sartay said:


> And is there a kind of second layer of protection offered from the EU in this case? i.e. would the EU then repay me the €100,000? Or are they under no obligation to do this?
> 
> I'm just wondering if we are relying solely on the Irish government to protect our funds in the event of Irish banks going down?


Technically yes, there is no obligation for the ECB/EU to step in. Doesn't mean they wouldn't do it though.


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## TomPetty (27 Apr 2011)

coin said:


> The currency would have to be devalued back to the punt I would imagine? If so the government could freeze savings account in UK banks operating here until you agree to take out funds in punts and face the devaluation.




I could see how they could do this to Irish owned Banks, but would they really have the power to freeze these accounts in non Irish owned instutitions - namely Nationwide UK / Rabo / National Irish Bank ?


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## bryanod (27 Apr 2011)

I don't see why they could not enforce it to all Irish Residents, it is within the free-zone after all. 

So if this worst-case scenario did occer, people in Sterling/USD will have lost value due to taking on unwanted/needed currency exposure, and still lose more if any freeze came to all residents.


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## UFC (27 Apr 2011)

If we recall what Argentina did - everyone with dollar denominated accounts had their dollars converted to pesos. In effect this meant you lost about 80% of your savings.


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## bluemac (27 Apr 2011)

TomPetty said:


> I could see how they could do this to Irish owned Banks, but would they really have the power to freeze these accounts in non Irish owned instutitions - namely Nationwide UK / Rabo / National Irish Bank ?




dont know if this effects this but NATUK ireland trade through BOI each evening to move th e money back to the uk..  so I guess all accounts would be frozen here as well


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## kdoc (27 Apr 2011)

bluemac said:


> dont know if this effects this but NATUK ireland trade through BOI each evening to move th e money back to the uk.. so I guess all accounts would be frozen here as well


 
Yes, this point has been made before. It would be at least somewhat problematic for most of the subsidiaries of foreign banks to operate without a functioning Irish banking system.


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