Huge Increase in BoI 2 Year Term Rate - 4.50%

Kev said:
Strling does not seem to be weak when you try to exchange the euro to it.
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Sterling is strong when compared to early 2009, but it is very weak when comparing more historically up to 2007. Sterling is a weaker currency than the euro.
 
By way of comparison IR£1 is now £1.12.

There has to be a question about Sterling going down, although some of that decline is already taking place.
 
This is a very tempting offer but I'm wary about putting my life savings into it.

What do you think are the chances of the banks going bust in the next 2 years and the government not being able to pick up the tab? If you had to put a percentage on it? 1% chance? 10%? 90% chance
 

The banks are already bust, the question is whether the state will follow suit and what the likelihood of that is. In my opinion it is very high and only increasing.
 
Doesn't this rate smack of desperation? Why pay such a huge amount over swap rates, and way more than the competition. It almost makes one wonder about BoI's funding base and liquidity position to be putting out offers like this. And if you are looking at 2 year returns where you are exposed to Irish government risk, why not buy 2 year government bonds where the yield is around 9%?
 
Chris said:
The banks are already bust, the question is whether the state will follow suit and what the likelihood of that is. In my opinion it is very high and only increasing.
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Yes.

75.52% chance of default inside the next 5 years.
91.35% chance of default inside the next 10 years.

The Economist this week called a default "inevitable".


Totally agree.

It's a very high rate due to IMF pressure for a 122% loans to deposits ratio, pressure from the ECB to decrease the huge emergency liquidity and desperation for deposits.
 
Yes, but do you want to be the fool putting your hard earned in the front door while all the smart boys are taking theirs out the back door.
 
After DIRT the rate for BOI is 3.285% per year. The An Post savings bonds for 3 years is tax-free and pays 3.23% per year.
There is currently a €100,000 guarantee by the Irish government. After that you've a lot of pseudo-economists claiming that UK and European banks would be a safer option without anything to back those statements up.
 
Joe Nonety said:
There is currently a €100,000 guarantee by the Irish government. After that you've a lot of pseudo-economists claiming that UK and European banks would be a safer option without anything to back those statements up.
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The guarantee for a term deposit is 100% of the amount regardless of the figure (under or over 100K) if the term deposit is opened before June 30th 2011. The Irish government has guaranteed all assets and most liabilities in the Irish banks. A huge part of the problem.

There is plenty of evidence to suggest that UK banks are safer than Irish banks. Start by looking at the credit default swap market for guidance.
 
I rang up to open one of these accounts and was told I have to make and attend an appointment at the bank (I am an existing BoI customer but these are "new" BoI funds.)

What's that all about? I haven't visited a bank branch since I took out my mortgage years ago! I sense a hard "cross sell" of other products. Anyone opened this account? What's this appointment all about?
 
A branch manager told me today that this product is being extended until at least 25th June.
 
A Caveat About this Product

Those interested ought to be aware that there's no provision to withdraw funds early in an emergency.

As I understand it, many fixed rate accounts allow early withdrawals but you have to pay a penalty. With this account, you get one chance to withdraw funds, at the end of the first year, aside from that the money is locked in with no exceptions.
 

A lot can happen within 5 years, a lot of time to make improvements to the economy.


mcriot29 said:
great rate im going for it
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AIB in the UK is covered by the UK guarantee
 
I tend to believe the EU will not allow depositors in any member state to be burned, even if the country defaults on (or "restructures") its sovereign debt. I would say a greater risk is that our deposits will be eroded by high inflation. But I'm no expert.
 


Or just creamed off by the government in the form of a levy to improve something or other.
 
I think that type of wealth levy would not be a clever policy. You might see a big flight of savings into cash under the mattress or to foreign banks. There would also be long term damage to public confidence in Irish-based savings accounts. (Of course the fact that a wealth tax would be unwise doesn't mean it won't happen.)

If it's necessary to raise revenue then, at this point in the economic cycle, taxing savings makes a lot of sense. But a better idea would be to further increase DIRT. In theory there's scope to treat savings interest in the same way as other income, where the top rate is now 50%+. I have no idea if DIRT raises very much revenue though.
 
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