# An Post - competing with Irish banks??



## OPTIMUM (11 Nov 2009)

Anybody got a view as to why is An Post paying 2.6% over euro money market rates? The rate below is higher than the Irish banks are paying on their notice accounts...so bizzarely NTMA is competing and unnecessarily paying more than Irish Nationwide !!

*An Post: 30 Day Notice*
_*3.00%*_ 
Note 1: *30 days notice *required for withdrawals. 
Note 2: This An Post account is subject to normal DIRT
Deposit protection: Irish Government guarantees all deposits

*Best Buys - Highest Term Deposit Rates
**3 Years* - An Post - *4.30%*
*5.5 Years* - An Post - *4.70%*


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## theresa1 (11 Nov 2009)

I took out my money from An Post 30 day notice a few years back and switched to anglo 30 day because rate was so low and then switched to premium demand within anglo and now I wish I was with An Post.


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## ardmacha (12 Nov 2009)

There is nothing particularly bizarre about this, the government is paying these rates on the International money markets. If they pay it to depositors in An Post then they get 25% of it back in DIRT. These are longer term rates and ECB rates will be 2%-3% higher in couple of years.


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## ballybrone (12 Nov 2009)

There is no dirt tax on the savings certificates from an post , so rates are good at the moment when compared to Anglo .I have all savings with Anglo in a 1 year fixed at 6 % till Jan 2010 , think I will then switch it to an post.


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## OPTIMUM (12 Nov 2009)

ardmacha said:


> There is nothing particularly bizarre about this,
> the government is paying these rates on the International money markets.
> If they pay it to depositors in An Post then they get 25% of it back in DIRT.
> These are longer term rates and
> ECB rates will be 2%-3% higher in couple of years.


I'm sure all the other banks are paying it also, but if An post set the market at 3pct, you can expect all the banks to be under pressure to pay at least this rate. Hence An Post are possibly distorting the market.
And if that's the supply cost, the cost of credit will not come down, but will rise further


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## Lightning (12 Nov 2009)

OPTIMUM - Interesting question. 

An Post rates rarely change. They have had the same rates for years, years on end. 

Bank rates are driven by ECB rates, competition and money markets rates. 

An Post rates are driven by legislation and NTMA needs. For example, the An Post 3 year and 5.5 year term deposits rates are set in legislation. They are not easily changed. 

Hence, An Post are not really driven by competition or money markets rates. Historically, An Post rates were not extremely competitive, but in the low interest environment they now are very competitive.   

Do they distort competition? Yes, absolutely. They offer unfair deposit protection over competitors and it is unfair that An post rates do not move in line with market forces. 

The government should not be in the savings market. Royal Mail sold heir deposit accounts to Bank of Ireland. Likewise, the Irish government should put An Post savings out to competitive tender.


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## OPTIMUM (12 Nov 2009)

Fungus, I agree - selling the deposit book, or splitting it amongst the banks would add liquidity...
I have written the Dept of Finance to suggest that they start deducting DIRT from An Post deposit accounts - there is no reason why they shouldnt look to make it the shortfall and tax all savings equally. Obviously elderly and low income can claim exception.


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## camlin90 (13 Nov 2009)

OPTIMUM said:


> I have written the Dept of Finance to suggest that they start deducting DIRT from An Post deposit accounts - there is no reason why they shouldnt look to make it the shortfall and tax all savings equally. Obviously elderly and low income can claim exception.



An hour well spent I'm sure. 
That will sort out the €20 billion no problem. Screw the prudent, sure it's worked for the last 100 years!


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## oldtimer (13 Nov 2009)

Well said Camlin - totally agree.


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## Bobby1 (14 Nov 2009)

camlin90 said:


> An hour well spent I'm sure.
> That will sort out the €20 billion no problem. Screw the prudent, sure it's worked for the last 100 years!


 
Well done I believe it was an hour well-spent.

Camlin- get real, its not about screwing the "prudent" its about exploring every single avenue that can save the state some money by trying to get out of the mess we are in. I take it by your remark you have funds in An Post? Yes it wont sort out the €20bn but it was help.

If we had less selfish people who are only out for themselves and more innovative people we would do a lot better for ourselves.

The Government should not be competing in retail deposit taking in the state, An Post Bank should be merged with Anglo and run as a single entity (and reduce costs further!) with a medium term view of rebuilding the bank back up to sell on hopefully at a profit to the state to recoup the money spent on it already.


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## camlin90 (14 Nov 2009)

Bobby1 said:


> Well done I believe it was an hour well-spent.
> 
> Camlin- get real, its not about screwing the "prudent" its about exploring every single avenue that can save the state some money by trying to get out of the mess we are in. I take it by your remark you have funds in An Post? Yes it wont sort out the €20



How much would scrapping the "mortgage interest relief" house price subsidy save?

How much would cutting ludicrous "rent allowance" house price/rent price subsidy save?

I'm not even going to merit these comments with any further attention but I don't think I'm the one who needs to get real.

PS - not a cent in An Post


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## MysticX (14 Nov 2009)

It might not be as bad as it appears at first glance?

As we can see the An Post: 30 Day Notice account is subject to normal DIRT and can be beaten if you shop around. 

As regards the savings cert, no doubt it is an interesting situation but probably more a culmination of multiple factors more than any intention of competition.
-Think these rates are still lower then those Ireland is paying right now especially with our 2 credit rating downgrades.
-The move from boom to burst, not sure how fast AnPost cycles through issues but it's probably fair to say the current issues became available when interest rates were much higher. I'm pretty sure I saw these issues available at least late last year which were the high days of ~5.1% for interest rates. So it was a much more level playing field back then, especially with the lower DIRT rate. 
-Obviously with the slew of other tax hikes to stem the deficit, AnPost Saving certs were hardly in mind when they increased the DIRT twice.

As regards the effect it has on distribution of retail deposits:
-3 to 5.5 years is a rather long term to lock savings away for, especially since Irish savers average at €13,400 (http://www.halifax.ie/index.jsp?p=109&n=770&a=11069) I doubt most people are happy to lock whatever savings they have away for that long... i.e. its a vertical customer base.
-The ECB rate is at its low point, so it should go up slowly as we recover (well not us persay but the EuroZone). Whether or not it'll give the edge back to retail deposits remains to be seen (especially if DIRT remains at its current rate). 

Banks do have an option to at least partially contest for smaller amounts in An Post saving certs... STA accounts? These were available in 2007 / 2008 offering people the option to earn up to ~600 DIRT free depending on the term length (at 1 point AIB was offering a 5 year STA variable rate @5% = 6% return). The big 'but' with them was the rate was variable and locking cash away that long with a variable rate was hardly something to do lightly. Is the variable rate intrinsic to STA accounts or could banks make them fixed if they choose to?


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## Bobby1 (15 Nov 2009)

camlin90 said:


> How much would scrapping the "mortgage interest relief" house price subsidy save?
> 
> How much would cutting ludicrous "rent allowance" house price/rent price subsidy save?
> 
> ...


 
Right so basically you would cut the mortgage interest relief at a time thousands of people are finding themselves unemployed and struggling to pay their mortgage, you take away a subsidy that will increase their payments! Throw the property market into deeper downfall while your at it

And "rent allowance" while I dont agree with the way its doled out, a fact of life is people depend on it, cutting it or scrapping it will turf loads of people onto the streets, thereby making a bigger problem for the government and at the end of the day cost even more to fix!

Do us all a favour and dont run for politics cos god help us if you got in! You have just demostrated even further by your comments why you need to get real if you think the points you raise above would actually help the countrys situation


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## camlin90 (15 Nov 2009)

Bobby1 said:


> ...


Maximum rent allowance for couple or one parent family with one child (likely to occupy 1 or 2 bed apt): €930 per month Dublin, €880 per month Kildare
source

Cut this to €600 per month.

Outcome 1: Landlords let out all their accommodation to the thousands of people who are banging down their doors looking for rental accommodation as evidenced by [broken link removed]

Outcome 2: Rents fall across the board as an artificial floor on rental costs is removed. Wages can fall and the economy becomes more competitive on the international stage. At the same time, millions are saved for the government finances. A few landlords throw the rattle out of the pram but realise the game is up and the gravy plane has long left Dublin Airport.



Bobby1 said:


> ...


Cut mortgage interest relief to zero for FTB.
Property prices fall across the board as an artificial subsidy to these prices is removed. More houses sell, wages can fall and the economy becomes more competitive on the international stage. At the same time government finances improve.

Regarding running for office, I considered it, but who has a chance against the vast legion of vested interests who call themselves politicians and the vast majority of the electorate whose sole interests are me fein, quick fixes and how much their houses are worth.


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