Decision time - remove savings from EBS

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sherib

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I have been quite exercised by recent press reports about the shenanigans in the board-room of the EBS. However, that is only secondary to my major gripe with the poor savings rates on offer where my funds have earned a miserly return during the past 3+ years. Today I read three articles in the Sunday Indo which only added flame to my fire. It appears the outcome of the bust-up is done and dusted. Anyhow I doubt if the retention of Ms Tinney would have made much difference.

As a result I have decided that I will remove all my savings from EBS at the first opportunity, a sum which is large to me though probably not to the overpaid CEO and the Directors. Still, it represents three quarters of all the money I have in the world. This action will cost me since the interest rate only improves in the 5th and 6th years - just less than three years from now. I am prepared to take the chance that rates in the rival banks may rise over the next year or so, then the loss won't be too great or maybe I'll take a dip into blue chips. Even if they don't, I am quite philosophical - I feel better by doing my bit towards reducing the profits and the balance sheet.

On the positive side I expect to be eligible for an INBS windfall (which will hardly be further away than three years) so some of that gain will more than cover any loss incurred by removing my money from the EBS. There comes a time, for me anyhow, when talk had to end and it's time to take action. If everyone else did the same, they'd feel as good as I do now:D.

PS I'm not totally stupid, I will leave enough to remain a member - the bare minimum.
 
sherib said:
Still, it represents three quarters of all the money I have in the world.
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What is it in at the moment (e.g. deposits, bonds, equities etc.) and why do you have such a large chunk of your savings with a single financial provider?

In my opinion it would be silly to withdraw money from a financial institution in some sort of kneejerk reaction to media coverage of a controversy before deciding what your overall financial/savings/investment needs and making plans to choose alternative products that match your specific needs.
This action will cost me since the interest rate only improves in the 5th and 6th years - just less than three years from now.
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So wouldn't you be cutting off your nose to spite your face?
 
Sherib. Clubman is right. There is no point taking a loss on a kneejerk reaction. You should really only move your money because it is in YOUR best financial interest.

With regard to your distaste of the EBS in it's current form. I probably share your lack of appreciation for the Chief Exec and the current board. There has however been some decent discussion on the fact that the new Chairman of the board might actually be worth his salt and could solve this mess. It would be worth holding off on your decision until there has at least been some feedback from today's AGM and better still a few months to allow for some sort of fallout (which I expect there will be). It could take a bit of time for the new chairman to get that house in order. The EBS still has great potential.

But yeah, you should divirsify your invested cash anyway and not really have it all with the one lender as clubman says.
 
I'm sure there is no need to tell you this, but shop around first and do your sums, before you withdraw your money. It could be possible that you might have put it in at a lot lower rate of interest than is going now, in which case it may be to your advantage. However, do your own sums, do not expect someone who works there to get it right, when giving you the answer. Then & only then would I remove my money, if it were me.

You are right when you say they won't care whether you stay or leave. Yes, the staff on the counter will do their job and try and retain the account, but at the end of the day you are only a number to the big boys in there.

Make sure you get your dues as they will have loaned out your money at a higher rate of interest over the time it's been there, so it would be a shame if you gave them an opportunity to profit from you as opposed to the other way around.

Hope this makes sense to you. Does to me.
 
Originally Posted by ClubMan
What is it in at the moment (e.g. deposits, bonds, equities etc.) and why do you have such a large chunk of your savings with a single financial provider?
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Thanks for all the sensible advice, I won't do anything stupid and do understand that I should only do what is in my best financial interest. I suppose I let myself get wound up due to all the recent adverse publicity about EBS. In answer to CM's Q, the money is locked in to a six years Sure Certs plan and can only be removed in total or part on the six month anniversary of the opening date. If I didn't adhere to that, I would loose any interest gained in that period. The next one is July 2007 with a further 2.5 years to go. As to why I went to EBS in the first place it was done in a hurry which for personal reasons I can't explain. In the first three years the interest paid was 9.25% before DIRT and inflation. Not great. In the current 6-month period it's only 2% increasing to 2.25% from July to next January bringing the full year to 4.25%. With Northern Rock paying 4.3% with no restrictions, it's easy to see why I'm dithering. The interest paid in the remaining two years will be a cumulative 11.5% which of course looks good but if ECB rates rise by more than 0.5% in the near-ish future, the whole scenario might change.
Originally Posted by Silvamuppet
I probably share your lack of appreciation for the Chief Exec and the current board. There has however been some decent discussion on the fact that the new Chairman of the board might actually be worth his salt and could solve this mess
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Loathe as I am to admit it I have to agree that the performance of the Chairman, Mark Moran, at yesterday's AGM was pretty impressive. For the most part he was never fazed and was very authoritative in his control of an explosive meeting. He has to be given credit for that and, who knows, maybe things will change under his leadership. He certainly had a baptism of fire. He also repeatedly said that the views expressed by the members would be taken on board. Time will tell. Still, he can't change the terms of the plan I'm in so I will continue to do the sums and monitor the best rates on offer. While I wouldn't anticipate a big crash it does appear likely that predictions beyond a year would be foolish.

In terms of diversification I'm very much a novice and only recently invested in three equities and have probably missed the boat that sailed so well in recent years. Since I couldn't be described as a risk-taker, tho' not totally adverse to some risk, I might consider being a little more adventurous in the future. Yesterday I just happened to sit beside a man, a retired Accountant, who came across as knowing his stuff. He talked about investing in well managed companies and mentioned a few that I won't repeat here for obvious reasons.
Originally Posted by TDON
....so it would be a shame if you gave them an opportunity to profit from you as opposed to the other way around. Hope this makes sense to you. Does to me.
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Makes perfect sense and thanks for that advice.
 
rather than moving your account, perhaps a better way would be to get a movement (revolution) going that would allow (force) sale of the society to someone and at least that way, all members would profit, and not just the board.

As another option, how could we put forward a motion for next years agm that in the event of departure/retirement/sacking/takeover/sale of the society, no director could expect to get any more than 1 months salary as compensation?

The EBS whilst preaching the benefits of mutuality, seem not to be practising the precepts. If mutuality was best, then they should have the lowest borrowing rates and the highest saving rates. Also, one would expect directors to be accepting a nominal gratuity instead of huge fees.
 
Ravima, the dirctors fees are one thing , and largely in line with industry standard I think. It would be nice if they didn't charge that much but that's the way the world goes.

It's the 760,000 and huge pension that the CEO is getting never mind the 600,000+ that the finance director is getting. And Tony Moroney is on excess of 200K i think. Now that is crazy!!!
I'd love to know what they've done over the last few years to justify that (in fairness the finance directer isn't in the job a year....still , 600+ thousand????)
 
Does anyone have access to this [broken link removed]?

I wonder how EBS compares with its peers taking into account EBS's relatively simple product portfolio.
 
I accept that the fees are in line with what other financial institutions pay, but to my mind, MUTUALITY means all benefit, not just a fes. Perhaps I am naive. In the old days, the directors of the local Savings banks pre Permenant TSB were nominally remuninerated. it is a position of honour rather than a sponge to soak from.
 
sherib said:
...

PS I'm not totally stupid, I will leave enough to remain a member - the bare minimum.
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Good call - who knows, someday soon (with a bit of luck), it might even get you a windfall and compensate you for all the years of lost interest, due to your loyalty to this "great" mutual society !

Cheers

G>
 
I am switching my mortgage from them, it has nothing to do with the AGM issues, its just that I can get a better deal elsewhere. Incidently I emailed EBS asking would they match the offer I got elsewhere and I did not even get a reply.
 
Originally Posted by ClubMan
Why can you not explain why you made this decision?
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The reasons I had to make the lodgement in a hurry are stilll personal but if you mean why did I choose EBS, then the answer is simple - brand image. I'd never had a mortgage with EBS but for whatever reason I'd always had the impression that, compared to others, EBS was the most ethical and upright mortgage institution. A powerful brand image is worth it's weight in gold and I believe that still holds good in a lot of peoples' eyes as far as EBS is concerned and will continue to do so for quite sometime to come - loathe as I am to say that.
 
What I cannot understand is "what exactly is expected from a Mutual Society?" in this day and age it is ridiculous to expect that a BS only lends out Members savings !!! I would imagine that the Society borrows money on the international wholesale markets (hence the need for a Moodys rating)...
so what do EBS / INBS savers and borrowers expect when they open an account? I imagine (having worked in UK BS in the 90s) that like any bank customer they either wanted to put a few quid away for a rainy day or buy a house!! is it not a bit 2 faced to take an all of a sudden interest inboard matters onthe basis that it might lead to a DM ???
do BOI /AIb / Ulst Bk customers expect anything more that decent service rasonable loan rates and save home for there few quid ?? do they expect to be appointed to the board becasuse they have 150 Euros or 150K in saving with them ??
I think that Building Societies have grown into complex Financial houses by accident rather than design.. It used to be simple... a bit like thecredit unions... Do we expect them to have the highest savings rates and lowest lending rates?
If anyone of the High st lenders offered ALL their customers the same rate as they offer the new ones coming in the door... quite simply they would be out of business..
from my days in a small UK society I found that most customers just wanted a more personal touch , less queues, easier access to a one to one interview, and access to their savings when required. they did not borrow or save with the intention of voting off board members or in the hope of a grand payout... nowadays its a strategic and greedy customer / member that expects to get 15K in a payout in thanks for holding 150euro in a small savings account..
so dont kid yourselves that your 1000 euros in helping house and home the young people of this country... its not... and whats more you can always take it out and spend it.. without making anyone homeless!!
just a view from someone with a small bit of insight into the workings of a small mutual ..
who is my mortgage with ???? Ulster Bank... although javing check I am paying 0.35% more that I would be with EBS... might just switch it for free..
 
Keeptabs. I think the problem people have with the EBS being a mutual and not demutualising is that they don't feel they are getting value for money. Remember this isn't just a case of a customer feeling hard done by. (whether that person has 1000 in savings or 100,000 they are still a member and entitled to their opinion ,whether it is a good one or not)
You ask the question

"do BOI /AIb / Ulst Bk customers expect anything more that decent service rasonable loan rates and save home for there few quid ??"

Customers can only expect to get what they are sold. No more and no less. EBS customers are however members and in a bank that would make them shareholders. As a share holder you would expect that the value of your share goes up or at least doesn't lose value and in cases where it isn't going up that you're getting a dividend. EBS shareholders (who are the customers) don't get this so they do expect something.

Some people go down the road of demutualisation. Maybe that's a good thing maybe it's not. But in the absence of the EBS NOT demutualising then the very least we expect as customers AND owners is the most competitive products on the market because as a mutual they can afford to have the tightest margins.

We don't expect them to lend at a lower rate than they pay interest on savings. Also we don't expect them to bother with loss leaders. We do expect that the mortgage rates are as low as possible and savings as high as possible (within sound economic viability).

ALSO (and this is a big bug bear of mine) we don't expect them to rip us off with their other products in order to make a bigger top line which will never get returned to us in the form of better rates. By this rip off I mean.
Switching their credit card to MBNA (Very expensive) from AIB.
Switching their fund Manager to Irish Life (mediocre) from Montgomery Oppenheim
Using Alliance as their insurance provider (many other insurers will give you a better quote than these guys when it comes to home insurance).
GE Capital as their personal loan providers (one of the most expensive onthe market)

If I was a shareholder in a bank doing this I would applaud it, I'd be getting dividends or seeing capital appreciation on the very healthy earnings the commission these other providers pay the EBS.
As a member of EBS I get nothing.

That is what people complain about.

Personally I would be happy for EBS to stay mutual. I think mutuality is great when it is geared towards the members. With EBS at the moment they have a management team paying themselves criminal amounts of cash in salary and pension and answerable to nobody (it should be the board but this board is largely full of yes men and women who have never questioned anything the CEO has done and when they did they got turfed off the board, or in Cathal Magees case had to do a very public about turn, maybe we haven't seen the last of his dissention, I hope not). This would never happen in a public company.
On top of that they are offering products that are just plain expensive and on the bread and butter stuff of savings and home loans offering rates that are ok and better than the average but nowhere near as competitive as they once were.
This unfortunatly gives the demutualisation crowd plenty of ammo to fire!

You are right on the customers wanting the personal touch in customer service and small queues etc etc. The EBS has been great at this for years although i fail to see how they will do this as they close down all their branches (they have been closing down branches for the last 5 to 10 years). The savings they make on this incidentally are another thing not translated into shaving their margin to our (the owners) financial betterment!
 
Silvamuppet: I still fail to see what difference there is in expectations of mutual customers, if EBS "offer" other services surely the members have a choice in wether to buy them or not!! They can jusge the value for themselves, if B.Societies are restrictred to selling loans (mortgages) and savings accounts then there stream of income would be very narrow and also very vunerable. So to increse revenue they offer other services and products. I remember from my days in UK when I worked for a small mutual, that the Branch Manager had targets to meet in all products... just like a bank.. the explanation of the targets contradicted in my opinion of what was ethical selling. The Banks where clever at this. What made the BS stand apart (for a while) was that customers preferred the experience in the office as they were not being targetted for the latest product on the shelf (visa/ health ins / pet Ins Whatever)
I think the most a BS member can expect is Fair value in total... otherwise why would anyone bother borrowing or savings with a bank???
the fact is that the cheapest rate does not win all of the business.. otherwise everyone would do their mortgage with the same institution..
I have no doubt that the salaries of the Executives and senior managers are very high... but I suspect that they are relatively small in comparision to their peers at the Banks and PLCs... (which overall is shockingly high... its not as if they are highly skilled surgeons saving lives for a living)

In relation to the switching of prioduct providers:

MBNA I have no love for as I had a CC for years with them .. now have an AIB one... but on checking .. it turns out that EBS / MBNA offer is better than what I am gettting with AIB

Re GE money: I checked again for their rates via local office... their Members Loan rate for car loan is cheaper than the GE own product!!
I asked if this made me a member?? it does not as they explained this service is offered to allow non mortgageholders to avail of small to medium sized personal loans (that EBS by law cannot do on their own) .. which I thought was fair enough..

You also said that savers in ebs are members which in a bank would make them shareholders... this is TOTALLY untrue...to be a share holder you MUST risk your money and purchase shares... at your own expense... IMO a very different prospect.. considering that even when you have purchased shares your vote (if any) would I imagine be related to the size of your holding... with EBS /INBS your membership gets you one vote regardless of the size / level of savings. without any risk of your on money on shares..

We don't expect them to lend at a lower rate than they pay interest on savings. Also we don't expect them to bother with loss leaders. We do expect that the mortgage rates are as low as possible and savings as high as possible (within sound economic viability

very simplistic approach... as I mentioned in the 1st email that lending is not done on the back over savers deposits any more.. otherwise all BS would be out of business.. I think your last comment hits the nail onthe head (within sound economic viability) I covered this on the basis that all ebs members get the same good (not best) variable rate .. unlike the Banks..

As for offices closing... I did not know they had closed any... must be Dublin based offices.. and even then I asume you are talking no more than 5 or 6 if that..

I am trying to understand why people get so het up about the BS membership... from my memory of AGMs in the UK .. it was a day out with free grub for the over 70s... who usually stored up a gripe or two about opening hours or the colour of the signs or uniforms... times have changed people have gotten very greedy and expectations seem to be out of proportion .. I have still retained my account with my old BS in the UK and do it out of sentiment rather than hope of a floatation ..

In short as a Bank customer and ex First active customer (I missed the share allocation ) I fail to see why such a fuss has been created about the value of the services and pricing at EBS (which on website comparision seems pretty good to me) when the real issue is one that the Board will have to sort out... Some good may come of this at some level as you can be damned sure teh Board will operate ina very clear transparent manner from now on... and who knows maybe they will once again take the lead in offering best value overall..

 
keeptabs said:
Silvamuppet: I still fail to see what difference there is in expectations of mutual customers, if EBS "offer" other services surely the members have a choice in wether to buy them or not!!
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This is my gripe though. Agreed the customers can choose not to use the services for themselves. But given the nature of a mutual I would expect it to be geared towards the members an offer them cheaper products.

keeptabs said:
They can jusge the value for themselves, if B.Societies are restrictred to selling loans (mortgages) and savings accounts then there stream of income would be very narrow and also very vunerable.
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I'm all in favour of them branching out. Certainly don't expect them to restrict their activities.

keeptabs said:
I think the most a BS member can expect is Fair value in total... otherwise why would anyone bother borrowing or savings with a bank???
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Agreed. Although They should be able to offer fairer value on their misc products and still drum up good commission (see point below) to boost the war chest.

keeptabs said:
In relation to the switching of prioduct providers:

MBNA I have no love for as I had a CC for years with them .. now have an AIB one... but on checking .. it turns out that EBS / MBNA offer is better than what I am gettting with AIB

Re GE money: I checked again for their rates via local office... their Members Loan rate for car loan is cheaper than the GE own product!!
I asked if this made me a member?? it does not as they explained this service is offered to allow non mortgageholders to avail of small to medium sized personal loans (that EBS by law cannot do on their own) .. which I thought was fair enough..
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These are still pricey enough. I would argue that surely they can negotiate better deals with vendors for their customers/members. Obviously they're not a charity to run at break even.

keeptabs said:
You also said that savers in ebs are members which in a bank would make them shareholders... this is TOTALLY untrue...to be a share holder you MUST risk your money and purchase shares... at your own expense... IMO a very different prospect.. considering that even when you have purchased shares your vote (if any) would I imagine be related to the size of your holding... with EBS /INBS your membership gets you one vote regardless of the size / level of savings. without any risk of your on money on shares..
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Caught red handed there. I was being overly simplistic with my comparison. But i still maintain to my central point that as owners we expect some sort of return much like a shareholder in a bank. The return in question is access to some of the most competitive products on the market. Competitive because the the society doesn't have to pay divedends or buy back shares etc. Note , i think it is a good part of the mutual that each member has 1 vote regardless of their 'holding' unlike shareholders who unless you are an institutional will never be heard.

keeptabs said:
As for offices closing... I did not know they had closed any... must be Dublin based offices.. and even then I asume you are talking no more than 5 or 6 if that..
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Fraid not. It's country wide. And there are a LOT of them. The EBS has been slowly going towards a tied agent model for the last few years. I think within the next 5 years they might manage to off load all but a handfull. It's possibly not visible as the agents still maintain the EBS logo and sell the ebs products. But branches I can think of off the top of my head are Grafton St, clare st, andrew st, westmoreland st and liffey street in the city centre alone (think they might have reopened liffey st within the last few months). Dont think ANY of these went tied agent...ie they're gone completly. Think Crumlin, Dalkey, Blackrock, Killiney and Bray all went within the last year although as tied agents so there might still be an office with the logo there. I know there are a lot more but I'm not totally up to date, but these are branches I would have frequented myself depending on where I worked at any one time.

I
keeptabs said:
times have changed people have gotten very greedy and expectations seem to be out of proportion
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I'll agree with you here. Not a demutualisation fan myself. I'll happily forgo the 5 to 15K that a demutualisation might give to have a rate on my mortgage that is nicely better than most of the other players. Ditto on the savings.

keeptabs said:
when the real issue is one that the Board will have to sort out... Some good may come of this at some level as you can be damned sure teh Board will operate ina very clear transparent manner from now on... and who knows maybe they will once again take the lead in offering best value overall..
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I genuinly hope you are right. I don't have much faith in this board with the recent revelations. I would say that Mark Moran deserves the benefit of teh doubt as he isn't in the job long enough!
 
Hi sherib
No need to be despondent...the sure certs were a good a/c at the time when most bank a/cs paid less than 1% in interest....now other banks offer more so you can switch if you want.The fact that shares would have been better is irrelevant now.
Did you get my p.m. hope it helped.
Inflation is hurting a lot of investments but maybe unavoidable.
 
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