Bank deposits may be at risk - Irish Times

OU812

http://www.irishtimes.com/business/sectors/financial-services/bank-deposits-of-over-100-000-may-be-at-risk-1.1384295

Saw this over on reddit. I think they'd go for a figure lower than 100k

srsly78

How is this news anyways, stuff over 100k was never formally protected?

gurramok

srsly78 wrote: »

How is this news anyways, stuff over 100k was never formally protected?

Yes, but this is seriously bad news. They will target depositors "as a last resort" who have over 100k in ALL banks as a means of funding a bailout of one or more banks in a national territory. This was never on the cards until Cyprus hit.

The fools will force people(ya know investors\savers) to convert their money to other currencies which do not have depositors as a target for bailouts.

srsly78

This was never protected = this was always on the cards.

gurramok

srsly78 wrote: »

This was never protected = this was always on the cards.

In a national bailout of banks? Since when? Out of all the European bailouts that happened before Cyprus, depositors large as well as small were not even considered to be targeted.
http://www.bbc.co.uk/news/business-21827922
http://www.bbc.co.uk/news/business-21920574

If I had 100k+ in a bank, i'd quickly move it to another currency when these new rules come in. I wouldn't even trust them if I had only 10k, as Cypriot savers who had this amount were considered legitimate targets for a bailout tax.

srsly78

Just because they didn't do this before doesn't mean there was any kind of protection in place.

Clearly having over 100k in an account is pretty dumb, when you could just redistribute it into multiple sub 100k accounts.

OU812

When the next round of write offs happen (although they're supposed to have made allowances for them in the first bailout), we're going to see some pretty scary stuff with the banks.

I'd say it's only a matter of time before deposits will be targeted.

gurramok

srsly78 wrote: »

Just because they didn't do this before doesn't mean there was any kind of protection in place.

Clearly having over 100k in an account is pretty dumb, when you could just redistribute it into multiple sub 100k accounts.

I wouldn't trust it been safe in this way either. They considered taxing small savers in Cyprus for the bailout, that was the precedent set and dented confidence in the Euro banks even further.

And if you have money in Irish, Spanish, Portuguese, Greek and Italian banks, the advice is to tread carefully as these countries are still vulnerable to future bailouts where depositors can be targeted.

srsly78

The big fuss over Cyprus was because there IS protection for deposits under 100k. Clearly hitting these depositors would break the rules and set a precedent.

There was no fuss about hitting deposits over 100k.

gurramok

srsly78 wrote: »

The big fuss over Cyprus was because there IS protection for deposits under 100k. Clearly hitting these depositors would break the rules and set a precedent.

There was no fuss about hitting deposits over 100k.

You didn't even read the link supplied.

Retail savers are being punished, by a levy of 6.75% on savings up to 100,000 euros.

The first bailout taxed small savers under 100k until it was changed over the outrage and contagion effect on other countries. The principle was broken then.

srsly78

The guarantee only applies to private individuals, not to businesses.

gurramok

srsly78 wrote: »

The guarantee only applies to private individuals, not to businesses.

The first Cyprus bailout violated the guarantee of small savings(less than 100k) held by private individuals. This was changed after the euro ministers realised it was a mistake to target them due to the outrage generated.

srsly78

Nope it was the Cypriots that wanted to hit the small savers initially. The ECB just told them to cough up X amount, how they gathered the X amount was left to themselves. Much easier to blame ze germans tho.

ScottSF

Clearly having over 100k in an account is pretty dumb, when you could just redistribute it into multiple sub 100k accounts.

I was a bit confused by the statement above so wanted to clarify for all reading this thread or be corrected. My understanding is that the 100K deposit guarantee scheme is up to 100K per individual in each bank. So the multiple sub 100K accounts have to be in different banks and not separate accounts in the same bank.

FYI, http://www.nca.ie/nca/deposit-guarantee-scheme
offers simple examples and how much of your deposit is protected just in case.

Dampintheattic

Noonan, with one stroke of his pen, robbed our private pension funds:(
I think it was, 0.6% per year for four years.

Absolutely nothing to stop him, robbing our deposits, if the mood were to take him, at any given point in future. And that's outside of a necessary bank bail out.

In any case, mony on deposit, right now, is shrinking in real terms, 24/7.

No need to wait around for a bank bail out / bank bail in, to lose part of your cash:rolleyes:

bbam

OU812 wrote: »

When the next round of write offs happen (although they're supposed to have made allowances for them in the first bailout), we're going to see some pretty scary stuff with the banks.

I'd say it's only a matter of time before deposits will be targeted.

We heard the whole "it's only a matter of time" rubbish before with deposits, euro collapse, riots on the streets in Dublin.
When things go quiet people love to stir up a story.

People were told to ditch currency and buy Gold. Didn't the price of Gold slump ? And still deposits in banks are still there.

For the Joe soap with less than 100k in the bank it's safer in the ban than jumping into something you know little about.

AlmightyCushion

Dampintheattic wrote: »

Noonan, with one stroke of his pen, robbed our private pension funds:(
I think it was, 0.6% per year for four years.

Absolutely nothing to stop him, robbing our deposits, if the mood were to take him, at any given point in future. And that's outside of a necessary bank bail out.

In any case, mony on deposit, right now, is shrinking in real terms, 24/7.

No need to wait around for a bank bail out / bank bail in, to lose part of your cash:rolleyes:

Deposits are riskier to tax than a pension fund. Usually you can't touch your pension fund whereas deposits can be withdrawn or transferred out of the country in no time.

srsly78

Dampintheattic wrote: »

Noonan, with one stroke of his pen, robbed our private pension funds:(
I think it was, 0.6% per year for four years.

Absolutely nothing to stop him, robbing our deposits, if the mood were to take him, at any given point in future.

That would be in breach of the EU guarantee and Noonan would get a spanking. However you are correct in that Ireland could withdraw from the EU and then steal all our loot. If there was any danger of that happening would you have your money in an Irish bank? I'm sure I am not the only poster with multiple perfectly legitimate foreign accounts on standby.

Cerco

Let us not forget that our Government congratulated Cyprus when they decided to hit the small depositors.

There was a lot of back tracking after the Cypriot people rejected this and the Government went for the larger deposits.

Link

carpejugulum

Savings are already being hit by the current low interest rates and QE. It's the same as taking your money but not perceived as such.

ScottSF

carpejugulum wrote: »

Savings are already being hit by the current low interest rates and QE. It's the same as taking your money but not perceived as such.

What does QE mean?

I always laugh when people complain about the "low" bank interest rates
Have you every checked out the rates U.S. banks are paying? Major banks like Bank of America pay 0.25% or less. I'm happy that savings accounts in Ireland can pay 2% and higher if you don't need instant access.

Here is a roundup of the best U.S. rates you can get on a high interest savings account (1 year CD accounts are no better):
http://www.bankrate.com/funnel/savings/savings-results.aspx?prods=33

srsly78

ScottSF wrote: »

I'm happy that savings accounts in Ireland can pay 2% and higher if you don't need instant access.

There are instant access accounts paying 2.5% here right now. Or do you mean post-dirt?

carpejugulum

ScottSF wrote: »

What does QE mean?

I always laugh when people complain about the "low" bank interest rates
Have you every checked out the rates U.S. banks are paying? Major banks like Bank of America pay 0.25% or less. I'm happy that savings accounts in Ireland can pay 2% and higher if you don't need instant access.

Here is a roundup of the best U.S. rates you can get on a high interest savings account (1 year CD accounts are no better):
http://www.bankrate.com/funnel/savings/savings-results.aspx?prods=33

Quantitative Easing = money printing

The US central bank has been doing the same.

Farmer Pudsey

Dampintheattic wrote: »

Noonan, with one stroke of his pen, robbed our private pension funds:(
I think it was, 0.6% per year for four years.

Absolutely nothing to stop him, robbing our deposits, if the mood were to take him, at any given point in future. And that's outside of a necessary bank bail out.

In any case, mony on deposit, right now, is shrinking in real terms, 24/7.

No need to wait around for a bank bail out / bank bail in, to lose part of your cash:rolleyes:

The reality is that you money is safer in a bank than anywhere else. How safe is the US or Japan. You do not know what will happen in China or Russia.

4 years ago loads of people were advised to put there money in gold, sterling or in German bank accounts. The people who deposited it in Ireland and actively managed it earned over 3%/year before dirt. Some even got the interest in advance.

In a German bank you might have averaged a half a percent, gold and sterling have fallen in value. A bit of commonscense is needed, if you have more than 100K leave no more than that in any bank (I do not). The government knows that it will only once levy deposits as after that loads of money will flow out of the country.

In reality it already has a levy in place it is call DIRT, it is planning to also charge PRSI on Interest. This will bring the tax on interest to above 35% of interest earned. On money earning 2% this is equivalent to a 0.7% levy.

Joe Duffy nearly started a run on the banks a few years ago lets not try to start another as we will all be the loosers.

Cody Pomeray

srsly78 wrote: »

This was never protected = this was always on the cards.

I love this sh1t.

I agree, deposit insurance is pretty pointless if a Government is just going to guarantee all unsecured liabilities anyway.

But can we please have less of the equivalent of "oh ya lik I'm not even bothered if u dont know this ur thick lol"

It would be a big deal. It would be a major shock if it happened. Most people, or businesses rather, who place their funds in European banks do not consider such haircuts "on the cards". Thankfully.

dlouth15

gurramok wrote: »

The first Cyprus bailout violated the guarantee of small savings(less than 100k) held by private individuals. This was changed after the euro ministers realised it was a mistake to target them due to the outrage generated.

I thought it was because the euroministers failed to get the required legislation passed in the Cyprus parliament.

Nody

dlouth15 wrote: »

I thought it was because the euroministers failed to get the required legislation passed in the Cyprus parliament.

The euroministers? It was their own damn government who wanted the 6.75% levy on below 100k so that they would not need to hit the Russian money to hard. The "euroministers" simply told them that they had to cough up X Billion and how they got that was their choice (i.e. they could have raised it by selling state property or mining rights or what ever but the Cyprus government decided to go after the deposits instead).

Cavehill Red

bbam wrote: »

People were told to ditch currency and buy Gold. Didn't the price of Gold slump ? And still deposits in banks are still there.

Told by whom?

An ounce of gold still weighs an ounce, same as it ever did. Over the long-term all fiat currency tends towards zero value. According to the Comex or London Bullion market, theoretically you can buy gold for less fiat than a couple of months ago, but inevitably, according to Gresham's law, there is a shortage of supply as people especially in Asia snap up what they see as a bargain. Actual hold-it-in-your-hand gold (as opposed to 'paper' gold like ETFs) is selling everywhere for a big premium where it is available at all.

Also, deposits in Cypriot banks aren't still there. The precedent has been set and repeated by senior EU officials since.

I conclude two things: depositors ought to be aware they are now considered as lenders to banks and their funds are at risk; and the true price of gold (or silver or platinum for that matter) is now more accurately discerned from ebay than it is from any of the official markets.

keeponhurling

srsly78 wrote: »

How is this news anyways, stuff over 100k was never formally protected?

From my understanding, the 100k guarantee the Irish govt gave was that if any particular bank went bust, their depositors up to 100k would be protected by the government.

In Cyprus they were going to go for taxes on depositers in all banks regardless of the financial health of the bank, but eventually realised what a bad idea that was, and changed their mind.

Am I right on this?

antoobrien

Cavehill Red wrote: »

Told by whom?

It was one of the recommendations that was made by financial advisors with certain.......interests.

We were also told that we should dump the Euro for Swiss Francs. Anybody who has invested since July 2011 has lost up to 10% of their investment value as the euro gets stronger against the swiss franc.

srsly78

Cody Pomeray wrote: »

I love this sh1t.

I agree, deposit insurance is pretty pointless if a Government is just going to guarantee all unsecured liabilities anyway.

The "unlimited guarantee" expired in 2010, you should pay more attention to important stuff like this.

Other posters have already linked official information about the current state of affairs, go and read it. For your convenience I will link it again: http://www.nca.ie/nca/deposit-guarantee-scheme

Cody Pomeray

srsly78 wrote: »

The "unlimited guarantee" expired in 2010, you should pay more attention to important stuff like this.

I'm not talking about the blanket guarantee.

I'm saying that deposit insurance seems pretty pointless if there is an expectation that Government cannot realistically touch large depositors. It's an argument against those who say deposits can never be touched.

What I take issue with is a statement like 'it was always on the cards' which I think exaggerates the prospect - historic or current - of such an eventuality by a really substantial degree.

http://idioms.thefreedictionary.com/on+the+cards
http://dictionary.cambridge.org/dictionary/british/be-on-the-cards

BKtje

antoobrien wrote: »

We were also told that we should dump the Euro for Swiss Francs. Anybody who has invested since July 2011 has lost up to 10% of their investment value as the euro gets stronger against the swiss franc.

Euro rose 10% verses the Swiss franc? That's news to me!
The euro dropped continually vs the franc from 1 euro = 150 ish chf down to momentary parity before the Swiss national bank applied a floor at 1.20 over two years ago. It has only just very recently risen to 1.22. I guess if you count the very short time of parity (less than a couple of days iirc) then the 10% figure is right but it doesn't convey what really happened. The Swiss Franc was seen more as a haven to minimise loss
than as a way to make profit.

Anyway I'm going off topic.

dlouth15

Nody wrote: »

The euroministers? It was their own damn government who wanted the 6.75% levy on below 100k so that they would not need to hit the Russian money to hard. The "euroministers" simply told them that they had to cough up X Billion and how they got that was their choice (i.e. they could have raised it by selling state property or mining rights or what ever but the Cyprus government decided to go after the deposits instead).

Please read gurramok's post to which I was responding. My recollection is that hitting the under 100k deposits was the solution that was agreed by the ministers including the Cypriot minister. It was welcomed, iirc, by the Irish government at the time. It was only when the solution was rejected unanimously by the Cypriot parliament that a new solution was proposed and agreed upon. The impression was given in the post that I was responding to that the ministers came to some sort realization when in fact the solution that they agreed simply could not be implemented due to a decision made in Cyprus. By euroministers I mean eurozone finance ministers by the way.

antoobrien

BKtje wrote: »

Euro rose 10% verses the Swiss franc? That's news to me!
The euro dropped continually vs the franc from 1 euro = 150 ish chf down to momentary parity before the Swiss national bank applied a floor at 1.20 over two years ago. It has only just very recently risen to 1.22. I guess if you count the very short time of parity (less than a couple of days iirc) then the 10% figure is right but it doesn't convey what really happened. The Swiss Franc was seen more as a haven to minimise loss
than as a way to make profit.

The floor was imposed in September 2011, at least 5 weeks after the lowest exchange rates (July 25th €1=1.03), the rate has been bouncing within +/- 5c of 1.20 since August 2011 (with a few spikes ether way). €100 invested in CHF at the lows is now worth €84. If you got in at the front (in late 2008 it was 1.62) it'd be worth a 30% gain, well and good. On the other hand if you're like Gurdiev & Ganely, who started pimping their get out of the euro scheme in mid 2011, you'll more than likely be holding more losses than if you had stayed Eurozone or bought into the S&P. Those are the risks we take when we invest/gamble (depending on your viewpoint) money.

justmehere

So to summarise:

1) Deposits are "guaranteed" up to €100k per institution if a bank needs a bail-out (but as #2 below shows, that may give you a false feeling of security...)

2) There is absolutely nothing stopping Noonan slapping a 10% tax on deposits of any amount in the budget.
So he hasn't broken the rules of the guarantee scheme, but to the depositor that's cold comfort when 10% of their savings disappear into Enda's pay packet.

Farmer Pudsey

justmehere wrote: »

So to summarise:

1) Deposits are "guaranteed" up to €100k per institution if a bank needs a bail-out (but as #2 below shows, that may give you a false feeling of security...)

2) There is absolutely nothing stopping Noonan slapping a 10% tax on deposits of any amount in the budget.
So he hasn't broken the rules of the guarantee scheme, but to the depositor that's cold comfort when 10% of their savings disappear into Enda's pay packet.

The thing is he will only do it once as all money will flood out of the country, Banks will instantly go bust as they cannot give everybody there money. This will trigger the 100K guarantee which the government cannot pay as they are bust.

There is nothing stopping Noonan from cutting Social welfare by 20% but again he will not do it neither will he cut PS pay by another 10% .

Will someone come up with a better Chicken Licken story about the sky going to fall in. This one is a school boy economics theory

At the moment he is getting about 0.6% of a capital tax every year on savings using DIRT and the introduction of PRSI on deposit interest will increase this.

gaius c

srsly78 wrote: »

Nope it was the Cypriots that wanted to hit the small savers initially. The ECB just told them to cough up X amount, how they gathered the X amount was left to themselves. Much easier to blame ze germans tho.

One important difference between us and the Cypriots is that their bondholders were relatively small compared to their deposit mountain so they really had no choice to burn the depositers to some extent. Of course, the ECB insisted that they didn't touch bondholders at all, which is a different story...

On the other hand, Irish banks didn't have sufficient deposits so they had to seek money elsewhere, hence the funding via bondholders.

At this stage, I think it's a given that deposits are going to be garnished one way or another. The arrears crisis finally sinking our banks will see to that. There could well be bloodshed when folk see that debt write-off is being funded directly out of their bank accounts.

antoobrien

gaius c wrote: »

One important difference between us and the Cypriots is that their bondholders were relatively small compared to their deposit mountain so they really had no choice to burn the depositers to some extent. Of course, the ECB insisted that they didn't touch bondholders at all, which is a different story...

Not true at all, that was Cyprus themselves. The final deal included bondholders, but the fact is that the amounts were so small as to be insignificant compared to the total amount, so depositors had to be hit.

gaius c wrote: »

At this stage, I think it's a given that deposits are going to be garnished one way or another. The arrears crisis finally sinking our banks will see to that.

If there were an ounce of truth in that the banks would not be reducing their posted losses. It seems that some people want the banks to fail so that they can be seen to be right.

Joe 90

Farmer Pudsey wrote: »

The thing is he will only do it once as all money will flood out of the country, Banks will instantly go bust as they cannot give everybody there money. This will trigger the 100K guarantee which the government cannot pay as they are bust.

There is nothing stopping Noonan from cutting Social welfare by 20% but again he will not do it neither will he cut PS pay by another 10% .

Will someone come up with a better Chicken Licken story about the sky going to fall in. This one is a school boy economics theory

At the moment he is getting about 0.6% of a capital tax every year on savings using DIRT and the introduction of PRSI on deposit interest will increase this.

In fact Noonan, along with most other politicians, not just in Ireland, already has a capital tax giving a lot more than .6%. It is called inflation and has been sold as a good thing to a lot of the populace.

realitykeeper

OU812 wrote: »

http://www.irishtimes.com/business/sectors/financial-services/bank-deposits-of-over-100-000-may-be-at-risk-1.1384295

Saw this over on reddit. I think they'd go for a figure lower than 100k

There is a hierarchy of suckers. In the case of a bank failing, I think the depositors would be the first to be hit - ironic given that it is the borrowers who are to blame. Maybe it is time to move money out of the Irish banks, at least until the mortgage arrears issue is sorted out. If the tax payer is forced to pick up the tab, it might be a good idea for anyone with savings to keeps their money abroad permanently. The government would only try to take it to pay for other peoples debts.