Bank account insurance

davidz · 17-09-2008 11:14am #1

Hi, On the latest worrying proceedings in the US with big banks failing, I wonder if there's an insurance policy in Ireland for bank account balances? I know in the US th state guarantees that you will get your money if your bank goes bankrupt up to 100k USD/bank account. Is there any such thing here in Ireland?

leninbenjamin · 17-09-2008 11:20am

Ireland has possibly one of the worst forms of deposit insurance in the Western world. it's something like 20% of all deposits with a maximum payment of €20,000. suffice to say, it's little insurance.

leeroybrown · 17-09-2008 11:23am

It's 90% of the deposit to a maximum of €20,000.

EDIT: Link from the Financial Regulator's site

leninbenjamin · 17-09-2008 11:32am

leeroybrown wrote: »

It's 90% of the deposit to a maximum of €20,000.

EDIT: Link from the Financial Regulator's site

according to that site: 90% is the maximum you will receive. doesn't say what the minimum is; which is the more important figure.

davidz · 17-09-2008 11:45am

Thanks for the link and the quick answers. The relevant section seems to be this one

Limits on Compensation
The maximum amount payable to any depositor is 90 per cent. of the aggregate deposits held by that depositor subject to a maximum compensation payment of €20,000. Thus, a depositor with a deposit account totalling €5,000 would receive compensation of €4,500 while a depositor with deposits of €22,222 or more would receive the maximum compensation of €20,000.

So it does say max 90%, but the example suggests it's always 90% below 22222€ and 20000€ max if the deposit is more than 22222€.... still more ambigous than such a document should be:mad:

leeroybrown · 17-09-2008 11:51am

The minimum is uncapped as it's a joint fund not a state guarantee. In a worst case situation the payout percentage would 90% * (joint fund cash available to liquidator / aggregate deposit liability in the ideal case). If memory serves me correctly the joint fund is currently worth just over €0.5bn.

17-09-2008 11:52am

It's very simple as I understand it.
Basically if you have €22,000 or more on deposit,you will get a max of €20,000 back out of this.
If you have less than that,you get 90% of whatever you have.

If you have €62,000 for example and the bank goes bust,you lose €40k.

I'm about as worried about the likes of AIB or BOI going bust as I am of three rock erupting as a volcano in the morning.
It aint going to happen anytime soon folks.
Those banks are as sold as three rock.

Even BOI's statement this morning on the percentage of bad debt they have in the current climate says it's 0.5% of the total and might rise to 0.9% in 2 years.
So 99.5% of their loan book is safe.

They've also kept back €300 million in dividends to shore up their balance sheet further.

leeroybrown · 17-09-2008 11:57am

One thing I'd be interested in knowing is if the Irish scheme includes a liability offset clause whereby a liquidator could factor monies the customer owes the bank through loan into their payout calculation thus reducing their protection.

davidz · 17-09-2008 11:59am

The next obvios question is: is it possible our big banks get into trouble? If you ask me a week ago I would've said no such big mammoths never fail...now after the events in the US I took a look at the share prices of Bank Of Ireland and RBOS (owner of Ulster Bank)

BoI: January: 18€/share Today: 4.17€....
RBOS: January: 450£ Today: 184.2£

(both quotes from London Stock Exchange)

I didn't check out others, but looks a bit worrying to me, and I'm glad I left BoI a year ago (I'm with Ulster Bank know :rolleyes:). Is it time to try moving funds to more stable banks, or maybe this just means it's a good time to buy bank shares?

eamonnm79 · 17-09-2008 2:19pm

If you have more than 22,222 euro on deposit then it might be an idea to move some money to a different bank group. But anyone with that amount on deposit would probobly know that by now.

Harpy · 17-09-2008 3:13pm

would nib be considered a stable bank at this time?

ooter · 17-09-2008 8:31pm

qick question folks,do these Rules also apply for Credit Unions?

leeroybrown · 17-09-2008 10:36pm

ooter wrote: »

qick question folks,do these Rules also apply for Credit Unions?

This is a bit more complicated.

Unless things have changed very recently the Credit Unions are currently not covered by a the national deposit protection fund. The banks have always strongly opposed their joining on the basis that they are not subject to the same degree of regulation and risk protection. Due to this the Irish League of Credit Unions operates it's own deposit protection fund that all of it's member Credit Unions can join. This fund provides around half the maximum payback the national fund does. In addition, I think there is a bill slowly meandering it's way through the various stages of government that might eventually provide a statutory national fund similar to that for banks.

18-09-2008 9:26am

davidz wrote: »

Is it time to try moving funds to more stable banks, or maybe this just means it's a good time to buy bank shares?

Lol-You couldn't get more stable than BOI and AIB-look at their balance sheet.
Their falling share price is a function of international worries not domestic ones.

As for buying their shares.
Put it to you this way,there are I reckon people who sold at 5 or 6 euro who are probably buying back a larger amount than they sold now at todays prices and still having change.

I'd be surprised if they didn't fall further in the meantime given the faux jollies that the stock market it.But I'd also be surprised if following an upturn that they are not back up there at 6 or 7 euro again.

davidz · 18-09-2008 10:08am

Yes, balance sheets look fine, but the share price is more than just a nice (or ugly) figure and if they keep on going in the same direction for a few months more, many bank will have serious market capitalization issues...

Dun laoire · 18-09-2008 6:40pm

If you had your few quid stashed in Permanent TSB would you get it the hell out of there?

*waits anxiously for replies

Bank account insurance

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