What Happens if My Bank Goes Bankrupt?

Gareth37

In the hypothetical situation of BOI going bankrupt what happens to people who have morgages, do they keep their houses etc or what happens?

Also, I have some savings, will I lose it all if my bank goes bankrupt?

Thanks for any advice

Heroditas

You keep your house but unfortunately you still pay your mortgage. another company will step in and pick up the mortgages as an asset and you continue paying your money to them.

As for savings, each bank has an insurance policy that will cover x amount of your savings with them. Hence why it is recommended you save with more than one bank and prevent yourself losing everything if one institution folds.

Oafley Jones

You're only covered up to 20k with Irish banks.

Gareth37

Thanks for the feedback.

So some other company get my morgage for free? So eventhough my house is now valueless as its impossible to get even people interested in buying some company will take it over, do they have to pay something to get it?

AIG insurance are almost bankrupt too so I wiouldn't hold my breath on getting any savings back then if a bank went burst as seems likely in the current state of things.

Thanks anyway

SkepticOne

Gareth37 wrote: »

Thanks for the feedback.

So some other company get my morgage for free? So eventhough my house is now valueless as its impossible to get even people interested in buying some company will take it over, do they have to pay something to get it?

Some other company would buy your mortgage most likely at a discount. You would still owe the full amount whoever buys the debt.

Gareth37

SkepticOne wrote: »

Some other company would buy your mortgage most likely at a discount. You would still owe the full amount whoever buys the debt.

Thanks very much.

I don't have much savings but what I do have is going into a big British bank as soon as possible

dan_d

Our mortgage is with bank of Scotland, and I hear today that it lost a lot of value on the stock market. If it goes, I take it another bank will step in and buy the mortgage?And will that affect interest rates on the mortgage?
At the time, we opened a joint account with Halifax to pay our mortgage out of, and the guy who spoke to us was really pushing us to change all our banking to them, going so far as to open a savings account for each of us and trying to persuade us to take their credit card and open a current account each with them.I refused to use the savings account and I turned down the credit card aswell; he was a bit insulted.At the time it was simply because I felt it wasn't right to put all my eggs in one basket and also because I felt that the bank that had my mortgage didn't need to know the balance of my savings account after I got the mortgage or the rate of my saving. My own current account is with BOI and my saving account is with a credit union...and believe me, it's staying that way. Looking at today's news, I'm very glad I stuck with my feelings at the time.

Oafley Jones

Gareth37 wrote: »

Thanks very much.

I don't have much savings but what I do have is going into a big British bank as soon as possible

British banks can fail too, thats why I'd recommend Northern Rock.

Gareth37

Oafley Jones wrote: »

British banks can fail too, thats why I'd recommend Northern Rock.

The biggest banks should not fail. Im sure Northern Rock will survive a sit is still being backed up by the British Government but I may just put some in AIB and most in the post office.

thetyreman

The thing to do is buy yourself a good safe (fireproof) and keep your money at home,
Its not as if you are going to lose a whole lot of interest by not haveing it in the bank.. IMO..

Oafley Jones

Gareth37 wrote: »

The biggest banks should not fail.

Do you check the news often?

ixoy

Oafley Jones wrote: »

You're only covered up to 20k with Irish banks.

Not the full truth - you'll receive 90% of your savings stored with an Irish bank, up to a maximum of 20k. So the paranoid should only put about €22,222 in any one Irish bank (this is across all accounts they may have with that bank).

SkepticOne

dan_d wrote: »

Our mortgage is with bank of Scotland, and I hear today that it lost a lot of value on the stock market. If it goes, I take it another bank will step in and buy the mortgage?And will that affect interest rates on the mortgage?

I think it is fairly safe to say that your debts will be looked after. If you are on a tracker or fixed rate then I would imagine the other company would be obliged to stay with that arrangement.

January

Gareth37 wrote: »

Thanks for the feedback.

So some other company get my morgage for free? So eventhough my house is now valueless as its impossible to get even people interested in buying some company will take it over, do they have to pay something to get it?

AIG insurance are almost bankrupt too so I wiouldn't hold my breath on getting any savings back then if a bank went burst as seems likely in the current state of things.

Thanks anyway

AIG Insurance are not nearly bankrupt. Their parent company in the USA is nearly bankrupt. AIG Ireland are a free standing company with it's own capital and are nowhere near going bust.

DJDC

AIG Insurance are not nearly bankrupt. Their parent company in the USA is nearly bankrupt. AIG Ireland are a free standing company with it's own capital and are nowhere near going bust.

Source please? I very much doubt that they will exist in their current form if the parent company go into liquidation. Even if it has its own capital,the parent company will be forced to sell of the subsidaries assets to pay off creditors as a result of the liquidation process.

arctictree

Seems hardly fair that if a bank goes bust, you only get 20K of your savings but you still owe your full mortgage! Does whoever is taking over the bank, not have to take over their debts as well as their assets?

BobbyD10

I would have thought savings should be 100% guaranteed, but obviously not..!!!

Is it the government that can change that.?

Even bookies have higher limits than that and they wudnt be dealing with the profits banks where making.

Electric

They were talking about this on the Last Word this evening but there doesn't seem to be any sign of the Government increasing the savings protection. One commentator argued that it would send out a bad signal about the state of Irish banks,but another argued it would be good because it would allay peoples fears.

Still though it doesn't look like the 20k/90% cap is gonna be increased any time soon.

Afuera

arctictree wrote: »

Seems hardly fair that if a bank goes bust, you only get 20K of your savings but you still owe your full mortgage! Does whoever is taking over the bank, not have to take over their debts as well as their assets?

The thing is that nobody takes over a bank that is going to go bust; it is simply left to fail on it's own. Once that happens you are left with a situation where there are creditors on one side (who the bank owed money to) and the debtors (who owe money to the bank) on the other. The next step in bankruptcy usually requires that all assets are liquidated (turned into cash) so the failed bank can settle with as many creditors as possible. The bank's mortgages would be sold off to other banks as part of this since they make up a part of the assets (this is why your mortgage would not just disappear into thin air if the bank went bust).The problem is that having your money on deposit in a bank puts you very low down the list of creditors.

DublinWriter

Gareth37 wrote: »

I don't have much savings but what I do have is going into a big British bank as soon as possible

That's even worse! The current problem in banking is global, just in case you've been living in a cave.

Northern Rock are *the* safest bet right now. Why? Because they are owned by the British Government.

Anyone with a large amount invested in a bank should seriously consider splitting their capital in 20K blocks and putting it in different banks. That way all your savings are covered.

January

DJDC wrote: »

Source please? I very much doubt that they will exist in their current form if the parent company go into liquidation. Even if it has its own capital,the parent company will be forced to sell of the subsidaries assets to pay off creditors as a result of the liquidation process.

The source? AIG Ireland.

BendiBus

SkepticOne wrote: »

If you are on a tracker or fixed rate then I would imagine the other company would be obliged to stay with that arrangement.

That was going to be my question. If my contract is with the failed bank, then is the new owner of my debt obliged to honour that contract or can they change the terms?

SkepticOne

BendiBus wrote: »

That was going to be my question. If my contract is with the failed bank, then is the new owner of my debt obliged to honour that contract or can they change the terms?

I'm not a financial adviser or lawyer so you should seek proper professional advice for certainty. I believe that another company can't change the terms without your consent. If it is a standard variable mortgage then they may be able to charge more, however, without changing the contract.

Gareth37

Thanks a lot guys and girls.

I think that the post office or credit union is the answer.

Since Irish banks' assets are largely property I assume that they all will be bankrupt pretty soon.

....... and whatever insurance companies that guarantee the savings will go with them

ZYX

Gareth37 wrote: »

Thanks a lot guys and girls.
Since Irish banks' assets are largely property I assume that they all will be bankrupt pretty soon.

From Bank of Ireland's web site.
"Established in 1783, Bank of Ireland is a fully diversified financial services group with total assets in excess of $251bn"

NinjaTruncs

Say for instance you had 100K in savings and a 400k mortgage and the bank goes under, would the 100k you lose in saving be knocked off the 400k, Or would you lose a huge chunk of your 100k and still end up with a 400k mortgage?

thetyreman

thetyreman wrote: »

The thing to do is buy yourself a good safe (fireproof) and keep your money at home,
Its not as if you are going to lose a whole lot of interest by not haveing it in the bank.. IMO..

You are going to lose its value through inflation though.

jmayo

thetyreman wrote: »

The thing to do is buy yourself a good safe (fireproof) and keep your money at home,
Its not as if you are going to lose a whole lot of interest by not haveing it in the bank.. IMO..

You know maybe Bertie was very advanced in his thinking and was way ahead of his time
What is the story witht the Swiss banks, have they been affected much by exposure to subprime and secondly what is the story with setting up accounts with them ? Just asking :cool:

Climate Expert

People say to put in into a govt. backed savings institution.
But then again governments aren't immume from going bankrupt either. There is no such thing as a 100% secure savings account.

jackal

NinjaTruncs wrote: »

Say for instance you had 100K in savings and a 400k mortgage and the bank goes under, would the 100k you lose in saving be knocked off the 400k, Or would you lose a huge chunk of your 100k and still end up with a 400k mortgage?

What you owe and what you have saved are treated completely differently. The protection for savers here is poor, the protection for creditors is great!

In the situation above you would lose 80k of your savings, and still owe 400k of your mortgage.

Fairness has nothing to do with it, the little guy did not draw up the rules of the game.

Gareth37

ZYX wrote: »

From Bank of Ireland's web site.
"Established in 1783, Bank of Ireland is a fully diversified financial services group with total assets in excess of $251bn"

Yes, but it doesn't day when these assets were valued and how much was property, insurance or construction related.

Its probably the same for most banks though - dark days ahead.

arctictree

What happens if I owe the tax man 20K, am about to pay and my bank goes bust?!

NinjaTruncs

From the above info, you will get 18K back of your savings to pay off your tax, but you will still owe 2K to the taxman. I doubt the taxman will care how you lost your money he will still want paying

thetyreman

arctictree wrote: »

What happens if I owe the tax man 20K, am about to pay and my bank goes bust?!

As you said you owe te tax man 20k.

Zoodlebop

What if I have a small overdraft with the bank. Would another bank buy it off them? (Say €2000)

Victor

Zoodlebop wrote: »

What if I have a small overdraft with the bank. Would another bank buy it off them? (Say €2000)

Possibly. But realisticly the facility will be withdrawn and they will want cash.

jmayo

From doing basic checks the best Irish bets regarding guarantee of savings seem to be the Post Office.
Apart from that you are looking at foreign options: Northern Rock - Bank Of England guaranteed, RaboDirect - Dutch guaranteed or NIB - Danish guaranteed.
So much for good old Ireland, we guarantee the EU minimum which AFAIK was set back in 1995.

So much for our government and Central Bank being on top of things.
This is yet another case where the government should get off it's ass and up the guarantees becuase people are withdrawing deposits and moving them out of Irish banks.
I know I am.

Gareth37

jmayo wrote: »

From doing basic checks the best Irish bets regarding guarantee of savings seem to be the Post Office.
Apart from that you are looking at foreign options: Northern Rock - Bank Of England guaranteed, RaboDirect - Dutch guaranteed or NIB - Danish guaranteed.
So much for good old Ireland, we guarantee the EU minimum which AFAIK was set back in 1995.

So much for our government and Central Bank being on top of things.
This is yet another case where the government should get off it's ass and up the guarantees becuase people are withdrawing deposits and moving them out of Irish banks.
I know I am.

I think everyone is at this stage. :pac:

The guy in the post office was laughing at me when I asked if there was any chance of An Post going bust too :pac:

PullMyFinger!

Scary reading.

I have my life savings in one building society. Time to diversify?

PullMyFinger!

Its been raised to 100K from the original 20 http://www.boards.ie/vbulletin/showthread.php?t=2055382023

arctictree

PullMyFinger! wrote: »

Its been raised to 100K from the original 20 http://www.boards.ie/vbulletin/showthread.php?t=2055382023

Sorry, but the Government could never pay for such a bail out. Its just an empty promise that they hope the people will believe...

paddyblue

Are credit unions as safe as the Post Offices?