If the euro goes down because of devaluation will irish deposits in Rabo be devalued?

[Lightning]

I am confused on the Rabo business. In event of euro break up is there a difference in having a deposit with rabo or having an investment in one of their Funds. In each case do I get back Euro or "Punt".
If I get back "Punts" is this simply a name change at one to one or is it a devalued "Punt" leaving me with say half what I invested in Euro.
Will there be any difference between a deposit in an Irish bank and a deposit in Rabo in event of break up.
Any help? ?

Deposits held in any bank, that is governed by the laws of Ireland, are likely to have their EUR deposits subject to a conversion to new currency, including Rabobank. That is, if the eventuality ever arises.

In case of the break up of Euro - What about a deposit in a Swiss bank? Would this be as good as Germany? Are there any problems about getting deposit in Switzerland.

A deposit in Switerland would, most likely, be held in CHF. Hence, you open yourself up to FX risk. Also, it is not simple opening an account in Switzerland.

What are you trying to achieve? Protection against the possibility of EUR currency breakup?

 

[pilotsnipes]

Just looking for speculation here too.

I have a EURO account with Barclays in Newry. What do we reckon UK banks would do with accounts in euros if the euro were to "disappear".

I know nobody knows, but I'm happy for wild guesses too

 

[frankmac]

Deposits held in any bank, that is governed by the laws of Ireland, are likely to have their EUR deposits subject to a conversion to new currency, including Rabobank. That is, if the eventuality ever arises.

Ciaran Im sorry to be asking what may appear as a stupid question, but the reality is that a lot of people like myself dont have a clue and depend on people like yourself for advice clarifications and explanations.

So here goes. Does the above statement mean that if Ireland reverted to the Punt, and say the punt was valued at 50c to the euro, that every euro on deposit would be converted to two punts?

 

[PolkaDot]

@frankmac, I think it would mean every €1 would become 50p in the new currency. e.g. if you had €10,000 on deposit, this would become £5,000 punt nua.

It's the same thing that happens when you get married! You suddenly lose 50% of your wealth!

 

[Lightning]

Ciaran Im sorry to be asking what may appear as a stupid question, but the reality is that a lot of people like myself dont have a clue and depend on people like yourself for advice clarifications and explanations.

So here goes. Does the above statement mean that if Ireland reverted to the Punt, and say the punt was valued at 50c to the euro, that every euro on deposit would be converted to two punts?

No worries.

If hypothetically the conversion rate is 1 EUR = 2 units of a new Irish currency then yes you will get 2 units of the new currency. The problem is the new currency is likely to devalue against a basket of currencies, causing import prices to soar and then high inflation. That is if the EUR ever does break up.

 

[sole]

Did some suggest that there there would be a difference between having money in a Rabo Fund and a Deposit in the event ok the euro break up. If I have say money in BFG World Mining would that turn into "Punt Nua" as well as the deposit.

 

[Chris]

Did some suggest that there there would be a difference between having money in a Rabo Fund and a Deposit in the event ok the euro break up. If I have say money in BFG World Mining would that turn into "Punt Nua" as well as the deposit.

The fund price can be quoted in any currency, the funds gets its value from the underlying assets which can be quoted in any number of currencies.

 

[frankmac]

No worries.

If hypothetically the conversion rate is 1 EUR = 2 units of a new Irish currency then yes you will get 2 units of the new currency. The problem is the new currency is likely to devalue against a basket of currencies, causing import prices to soar and then high inflation. That is if the EUR ever does break up.

Thanks Ciaran. Thats what I thought ok.

 

[regicide]

The dud price can be quoted in any currency, the funds gets its value from the underlying assets which can be quoted in any number of currencies.

From the FAQ on the rabodirect.ie website:

What would happen to my investments at RaboDirect if Ireland decided to stop operating within the Euro currency?
The majority of funds offered by RaboDirect.ie have the Euro as their base currency, or have a Euro or Euro hedged fund alternative if the base currency is in US Dollars.
If Ireland decided not to operate within the Euro, and for example, reintroduced the Irish Pound, it would probably result in a depreciation of the currency against the Euro.
That means your Euro investments are likely to be in a stronger currency than the Irish Pound and your investment would remain in Euros until you sold your funds. At this point the value of your investments would be converted from Euro to the new currency.


Reg

 

[adox]

I have practically all of my savings on deposit with Rabo and I have been watching the situation over the last few weeks with interest.

Obviously there is no clear cut answer on what will happen but I`ve decided to withdraw 50% of the funds and pay it off my mortgage. If we do revert to the punt at least my savings wont take such a big hit, if it follows that there is a devaluation.

I`m going to leave the rest on deposit with Rabo until the new year and see where we are then.

 

[tommy78]

From the FAQ on the rabodirect.ie website:

What would happen to my investments at RaboDirect if Ireland decided to stop operating within the Euro currency?
The majority of funds offered by RaboDirect.ie have the Euro as their base currency, or have a Euro or Euro hedged fund alternative if the base currency is in US Dollars.
If Ireland decided not to operate within the Euro, and for example, reintroduced the Irish Pound, it would probably result in a depreciation of the currency against the Euro.
That means your Euro investments are likely to be in a stronger currency than the Irish Pound and your investment would remain in Euros until you sold your funds. At this point the value of your investments would be converted from Euro to the new currency.


Reg

Would a strategy be that if we were reverting to the Punt Nua , to buy Rabo funds with your savings in Rabo before devaluation and then when the dust has settled you sell those funds to hopefully maintain those current levels of savings ?

Apologies if unclear.

 

[Chris]

Would a strategy be that if we were reverting to the Punt Nua , to buy Rabo funds with your savings in Rabo before devaluation and then when the dust has settled you sell those funds to hopefully maintain those current levels of savings ?

Apologies if unclear.

Not unclear at all.

The question would be what capital restrictions would be put in place. I think it could be a bit more difficult to put those restrictions in place with a foreign bank. Nevertheless, the strategy is one I have put in place, as the little money I have left in Ireland is in Rabo for that very reason.

 

[ryaner]

Would a strategy be that if we were reverting to the Punt Nua , to buy Rabo funds with your savings in Rabo before devaluation and then when the dust has settled you sell those funds to hopefully maintain those current levels of savings ?

Apologies if unclear.

Would that not be liable for capital gains tax, since technically you are making money?

 

[smndly]

Would a strategy be that if we were reverting to the Punt Nua , to buy Rabo funds with your savings in Rabo before devaluation and then when the dust has settled you sell those funds to hopefully maintain those current levels of savings ?

Apologies if unclear.

Wouldn't devaluation happen over night though? The euro you have in your rabo deposit account would become punts before you have a chance to buy funds. Otherwise everyone would run to their banks to take out their euro before it becomes punts.

 

[tommy78]

Wouldn't devaluation happen over night though? The euro you have in your rabo deposit account would become punts before you have a chance to buy funds. Otherwise everyone would run to their banks to take out their euro before it becomes punts.

Well if you bought them now you would have a chance to buy those funds!

 

[WinnieP]

there was an question about this on the rabo site and the answer Rabo gave was they would have to comply with the legal situation in the relevant state, i.e if Ireland uses punts, accounts would have to go to punts. they did put in the disclaimer that no one really knows what the legal situation would be... i can;t find the thread anymore on their site.. I read it there about a year ago... Rabo also said they wouldn;t allow any Irish customers setup a dutch account but I know some people on here have managed that so who knows...

 

[Troy McClure]

From the FAQ on the rabodirect.ie website:

What would happen to my investments at RaboDirect if Ireland decided to stop operating within the Euro currency?
The majority of funds offered by RaboDirect.ie have the Euro as their base currency, or have a Euro or Euro hedged fund alternative if the base currency is in US Dollars.
If Ireland decided not to operate within the Euro, and for example, reintroduced the Irish Pound, it would probably result in a depreciation of the currency against the Euro.
That means your Euro investments are likely to be in a stronger currency than the Irish Pound and your investment would remain in Euros until you sold your funds. At this point the value of your investments would be converted from Euro to the new currency.
Reg

Thats interesting. It seems you could buy a rabo fund. As this fund has nothing to do with Ireland you would have to decide to exit the fund in your own time. The day you do that would dictate the exchange rate you recieve to any new domestic currency. This sounds like a form of protection, but thats not putting any though on the effects of a shock event of a Euro breakup on the unit value of such funds. It could out of the frying pan into the fire..

 

[tommy78]

Thats interesting. It seems you could buy a rabo fund. As this fund has nothing to do with Ireland you would have to decide to exit the fund in your own time. The day you do that would dictate the exchange rate you recieve to any new domestic currency. This sounds like a form of protection, but thats not putting any though on the effects of a shock event of a Euro breakup on the unit value of such funds. It could out of the frying pan into the fire..

Yes I would be worried that the fund value could be wiped out as a result of a Euro breakup.

Anybody know what type of fund would be the safest in this scenario ?

 

[RMB]

Saving EURO deposits in RABO Direct

Rabo rep confirmed with me funds deposited with them here would revert to Irish currency in the event of Euro breakup.

So this means the best place if one has a few Euros in savings is to keep them in a shoe box or mattress? Or risk losing the value of your money once we are back to Punts.

 

[penury]

So this means the best place if one has a few Euros in savings is to keep them in a shoe box or mattress?

That has been my thought all along, whatever bit of free money that I have

In the event I had several thousands of spare change, I would likely take some of my cash in euros and put it under the mattress so to speak - that being a safe in the wall or the floor.

The rest I would probably look at converting into Swiss francs, again that would be in cash - under the mattress.

Doing it this way I would lose any investment interest gain that may keep up with inflation, however, its in cash.

For everyday living expenses, I would use only the required amount of money that I need in local currency - anything left over, as above

The other thought is to convert all spare cash into loose diamonds with an accompanying certificate. For me, I would not convert my cash today into gold or gold certificates.