Is the new 100% of 100k a good idea?

Interesting point by Churozzo

Will we see a flood of deposits from other countries worried about the safety of their deposit seeing as we now offer one of the highest guarantees in Europe, and are English Speaking. ( No offence to Italians but would not be as common a language)

As bronte pointed out, not all Irish institutions accept deposits from non residents.

In my case non-national but resident and with money in my home country that will be soon just transfered here as I feel safer.

P.S. sorry about using the inexistent "taxsaver" work in a couple of places in my post where I meant "taxpayer" :S

What is TBTF in relaton to the two big Irish banks? Post 3.

The biggest winner out of all this is Joe Duffy, I'm not normally a fan but it's hard to believe that it's just a coincidence there was war about his programme last week and the minister just happened to have a new deposit scheme ready to go? We often on AAM tell people to get onto Joe and goodness it works. I was aware that a run on a bank would have done none of us any good and I had moved money from a deposit account into my current account ready to move it out of a bank but now I don't have to. I even looked up buying prize bonds but they only take 1.5K a day on laser card otherwise I would have temporarily bought quite a few of them so yes I think the new 100K is fantastic.

To Big To (be allowed) Fail.

I agree that Joe has done well. The Minister has rounded on him but if the system can't withstand a bit of voxpop on the Joe Duffy show then it is the system which is at fault, not Joe Duffy.

Are Prize Bonds considered a Financial Institution ? I thought they were more like a lottery where you get your capital back

Can I just say that the collapse of any of our banks would ultimately be bad for the whole Irish economy. The likes of Joe Duffy & Eddie Hobbs stirring it up and making people panic is exactly what we do not need.

The sooner all the bad debts are declared the clearer the picture will be.

The 100k guarantee is a very good idea. Otherwise a few of our banks would have been in a sorry state this week.

Yes, I do work in a bank and Thursday was not much fun. It's the first time I've witnessed what looked like the beginning of a run. Thank God people calmed down ! How do you think the Govt would cope if up to 10000 bankers joined the unemployed ranks ?

The whole scheme sounds like a bluff to me. I was even sceptical about the old €20,000 of deposits being covered. Now they're trying to tell us that they have the money to cover 100% at €100,000? Even if your cash is covered, how long are you waiting before you get it back? It all smells too fishy.

If there's one lesson I have learned from the financial crisis, it's that the share price is always a leading indicator of trouble. Now that the Irish banks have seen 70% of their value wiped out, I have no confidence in them. Northern Rock seems like the best place for your cash now.

Is today's announcement the best thing since sliced bread?
Some thoughts on what could happen as a result.

1. Deposit interest rates from Irish banks may fall significantly - especially if Irish banks can borrow at sovereign rates.
There's a fair chance we'll be kissing goodbye to those 6% - 8% accounts pretty soon. Fixing your rate now mightn't be a bad idea.

2. The government may now feel justified in hiking DIRT substantially - this guarantee has to be paid for somehow.
A rumour of a DIRT increase had been doing the rounds anyway.

3. Significant moral hazard. All those dodgy loans to developers, speculators and flippers - will we bother calling them in now? Or will we just roll them over for another couple of years.
Sure we can borrow another few hundred million to tide us over - guaranteed by the taxpayer!
The guy struggling to pay a 40-year mortgage may just have handed a get-out-of-jail card to reckless bankers, developers, speculators and flippers.

4. Are there opportunities for hedge funds and hostile foreign bank takeovers to exploit the guarantee at the taxpayer's expense?

5. Government bond credit default spreads have widened from 30bps to 60bps following today's announcement. In other words, potential lenders to Ireland Inc now view the economy as a more risky prospect.
Those billions we need to borrow to balance the books in 2009 are going to cost more.

The devil really is in the detail here. Something had to be done, but let's not get carried away on a wave of euphoria. Let's hope the government draft watertight, detailed and responsible terms and conditions for this guarantee.

Thread should be locked - just look at the title. If I have 10 million in an Irish Bank it's guaranteed.

CannyMcSavvy said:

The devil really is in the detail here. Something had to be done, but let's not get carried away on a wave of euphoria. Let's hope the government draft watertight, detailed and responsible terms and conditions for this guarantee.

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We can rest easy so - just look at what a great track record they have on that score......

We can rest easy so - just look at what a great track record they have on that score......

So true!

Does anyone know whether the 100% guarantee for 100K savings been regulated or not ?? I talked to Anglo Irish Bank and was told that this has not yet been regulated so it doesnt take effect right now. If the bank fails today for example you still can only get 90% of maximum 20K.