Irish Govt guarantees banks for two years

is_that_so · 01-10-2008 01:29PM

Commissioners make speeches all the time and it's taken her long enough. A review means just that and doesn't necessarily lead to your conclusion. There are now five other countries implicated. Incidentally the EU were informed about this. The main argument the Govt has, is that it is temporary, albeit for 2 years and the fact that the main thrust of the bill is to maintain system stability.

What she did say is that "countries should not act unilaterally but pick up the phone and let us help". McCreevy on RTE radio commented that actions have to be taken by member states quickly. Even so the fact that the EU got through the B&B review so quickly suggests that they might work out an EU-wide solution. They would find it preferable to having to square the various options that member states have used to date to address the problem.

ScumLord · 01-10-2008 02:19PM

Ok so, say the AIB went bust tomorrow, what happens to my ssia? Is that gone with it? Or do they just give me what's left of my money and show me the door?

My name is Mud · 01-10-2008 02:25PM

ScumLord wrote: »

Ok so, say the AIB went bust tomorrow, what happens to my ssia? Is that gone with it? Or do they just give me what's left of my money and show me the door?

The government gives you the full SSIA balance you had in AIB.

i.e.

The government has guaranteed your deposit 100%.

Two days ago, the government only guaranteed a max payout of 100k (still applies today to the majority of the foregin owned banks)

Previous to that, they only guaranteed 90% of your savings, up to a max payout of €20k per individual per institution.

The_Conductor · 01-10-2008 02:26PM

ScumLord wrote: »

Ok so, say the AIB went bust tomorrow, what happens to my ssia? Is that gone with it? Or do they just give me what's left of my money and show me the door?

If you still have SSIA money- you're one of a very few people who didn't blow it. It would be treated as a deposit, aka, guaranteed up to EUR100k.

S.

Ps- the max will be unlimited if/when the new Finance Bill passes

ScumLord · 01-10-2008 02:30PM

Cool so no worrys.

The_Conductor · 01-10-2008 03:35PM

Bank of Ireland confirm that all UK Post Office account holders are covered by Irish government guarantee.

gurramok · 01-10-2008 03:40PM

Wow. Expect every British granny and grandpa to horde their savings into the Post Office over there.
They wouldn't trust Northern Rock as older people tend to trust the post office more, BOI will make a killing.
No wonder the UK authorities are spooked!

Run_to_da_hills · 01-10-2008 03:41PM

Im with the Ulster Bank :mad:

K-9 · 01-10-2008 04:03PM

smccarrick wrote: »

Bank of Ireland confirm that all UK Post Office account holders are covered by Irish government guarantee.

Why, do they have own the accounts in the UK Post office?

The_Conductor · 01-10-2008 04:06PM

Seanies32 wrote: »

Why, do they have own the accounts in the UK Post office?

Bank of Ireland run the Post Office Bank for the Post Offices in the UK (same way that Fortis (I think) run the post office bank for An Post here).

S.

My name is Mud · 01-10-2008 04:17PM

Run_to_da_hills wrote: »

Im with the Ulster Bank :mad:

Unless you have over 100k in a savings account, nothing changes for you

is_that_so · 01-10-2008 04:21PM

Sarko likes it and the Italians are the next up with a plan of some kind. Any wonder the EU wants to put some order on it.

Taoiseach Brian Cowen - who is visiting Paris - has said his bank guarantee scheme has received backing from French President Nicolas Sarkozy.

Mr Cowen told reporters he thought Mr Sarkozy, whose country holds the rotating six-month presidency of the EU, understood precisely the reasons the Irish Government had to act.

Full story

http://www.rte.ie/news/2008/1001/markets.html

Dubh Geannain · 01-10-2008 05:16PM

The ammendments before this bill is passed could be interesting.

Apparently Labour are looking to cap bank executive salaries, so they are not paid more than the Minister for Finance. We'll see how that goes down.

Edit: Funny, that little rumour disappeared from Aertel right before my eyes :eek:

K-9 · 01-10-2008 05:19PM

smccarrick wrote: »

Bank of Ireland run the Post Office Bank for the Post Offices in the UK (same way that Fortis (I think) run the post office bank for An Post here).

S.

Definitely can see a run of deposits coming into the Irish banks abroad.

Apparently the UK want Ireland to see if it contravenes EU Law.

This could turn out similar to our corporation tax system which sees the UK leaking money!

Dubh Geannain · 01-10-2008 05:25PM

Seanies32 wrote: »

Apparently the UK want Ireland to see if it contravenes EU Law.

This could turn out similar to our corporation tax system which sees the UK leaking money!

We could have said the same about the HBOS merger. But they acted as it was "in the national interest", as is the case with Ireland

The_Conductor · 01-10-2008 05:26PM

Its definitely against the spirit of the common market- whether it breaches the strict rules concerning State Aid is a seperate question of course. The UK can be expected to fight it tooth and nail..... (as can Sweden, Germany and the Netherlands)

The_Conductor · 01-10-2008 05:28PM

Dubh Geannain wrote: »

We could have said the same about the HBOS merger. But they acted as it was "in the national interest", as is the case with Ireland

The thing is- it HBOS and the B&B mergers were planned with the competition directorate, while the Irish proposals were done behind closed doors. It could very well be that its just a case of a few noses being out of joint, time will tell.

Nolanger · 01-10-2008 05:28PM

USA population 300 million - bailout $700 billion
Ireland population 5 million - bailout $560 billion

Stabshauptmann · 01-10-2008 05:35PM

constitutionus wrote: »

christ the money involved is LARGER than what the yanks are looking for in the states !

You're wrong for 2 reasons, the americans are looking to spend €482bn
The Americans, if the bill is approved, will spend then money. We're hoping that by having this guarantee in place we wont have to spend a penny.

If this instils the necessary confidence in the banks, bailouts wont be needed.

jaycen · 01-10-2008 05:37PM

smccarrick wrote: »

Its definitely against the spirit of the common market- whether it breaches the strict rules concerning State Aid is a seperate question of course. The UK can be expected to fight it tooth and nail..... (as can Sweden, Germany and the Netherlands)

I can't see how, in the end it's as much Ireland vs the rest as our banks vs eachother.

TBH I think it's genius, imagine the foreign investment this is creating as we write.

The_Conductor · 01-10-2008 05:39PM

jaycen wrote: »

I can't see how, in the end it's as much Ireland vs the rest as our banks vs eachother.
.

The idea of the EU and the Common Market- is equal access for goods and services from all member states. In theory- we could end up having to give a similar guarantee to any EU based financial institution doing business in the country, in order to not fall foul of State Aid rules. Practice may prove different though.

woodseb · 01-10-2008 08:05PM

seems alot can't understand the nature of the measure

Ireland will committ to guarantee all of the banks in the event of the banks failing which is estimated at EUR400bln if in an armageddon type scenario the whole economy goes bust, everybody can't pay back their loans etc (within two years). There is no upfront direct cost and the worst case scenario cost for the govt is EUR14bln, in which case the state will own the banks....

the US bailout is not comparable at all - they are spending $700bln on buying some of the bad assets of the banks, which in relation to the total system is still very small

the taxpayer isn't paying anything at the moment and getting the benefit of guaranteed savings and safe banks

javaboy · 01-10-2008 08:16PM

woodseb wrote: »

Ireland will committ to guarantee all of the banks in the event of the banks failing which is estimated at EUR400bln if in an armageddon type scenario the whole economy goes bust, everybody can't pay back their loans etc (within two years). There is no upfront direct cost and the worst case scenario cost for the govt is EUR14bln, in which case the state will own the banks....

How do you figure that shelling out 14bil is the worst case scenario when giving a 400bil guarantee? Since nobody seems to actually have access to a true evaluation of bank assets+liabilities, I'd be very interested to know how you arrived at a figure of 14 billion as the maximum government liability.

the taxpayer isn't paying anything at the moment and getting the benefit of guaranteed savings and safe banks

I think the safe banks issue is why a lot of people object to this measure. The banks credit ratings have been updated to reflect the fact that they now have a government guarantee. So they are now able to borrow more on the strength of that. Why should they bother being prudent about their borrowing and lending now since they have got a safety net?

So we're not necessarily getting safer banks because of this measure. Safer for savers all right, but it might not to anything to help get the banks' houses in order.

The_Conductor · 01-10-2008 08:16PM

Not entirely true- the guarantee is on up to EUR400bl of specific liabilities, and not the institutions themselves. The US bailout is purchasing specific liabilities, the Irish bailout is guaranteeing the liabilities (as they currently exist) along with any new loans that may be advanced in the 2 year window, rather than purchasing the liabilities directly. While they are not directly comparable- and the US model is riskier- the US model has the benefit of an attempt to put a fair market value on the assets being offloaded on their taxpayers, with the adjacent benefit that should these assets prove to be performing in the longrun- the US taxpayer will benefit from them (the Irish model has no such quid pro quo).

S.

woodseb · 01-10-2008 08:52PM

javaboy wrote: »

How do you figure that shelling out 14bil is the worst case scenario when giving a 400bil guarantee? Since nobody seems to actually have access to a true evaluation of bank assets+liabilities, I'd be very interested to know how you arrived at a figure of 14 billion as the maximum government liability.

14bln came from an NCB report based on the level of loan impairments based on previous housing crashes in other countries, it may not be totally right but its an estimation and certainly more realistic than 400bln which is the total amount of covered by the govt, which includes mostly good assets

we do have pretty good access to the balance sheet value of irish banks, they do not have much of the toxic debt which has become impossible to value.

cooperguy · 01-10-2008 09:13PM

woodseb wrote: »

14bln came from an NCB report based on the level of loan impairments based on previous housing crashes in other countries, it may not be totally right but its an estimation and certainly more realistic than 400bln which is the total amount of covered by the govt, which includes mostly good assets

we do have pretty good access to the balance sheet value of irish banks, they do not have much of the toxic debt which has become impossible to value.

Ya people are really overplaying and/or dont understand the potential costs to the taxpayer with this deal. Although 14bn is a large amount of money it is only the cost of running the health service for one year. Hardly the state crippling numbers some people are talking about and also very very unlikely to have to be paid out.

Comparisons between this and the American proposal are crazy since the schemes aren't even similar!

Steve · 01-10-2008 10:26PM

Can someone answer me this:

The top Irish banks have been given a state guarantee for €100k per account.

This guarantee is being given by the Irish government - and is ultimately coming from the pocket of the Irish taxpayer.

Why then are our European neighbours who are flocking to put their savings in our banks being afforded the same guarantee?

is_that_so · 01-10-2008 10:47PM

smccarrick wrote: »

Its definitely against the spirit of the common market- whether it breaches the strict rules concerning State Aid is a seperate question of course. The UK can be expected to fight it tooth and nail..... (as can Sweden, Germany and the Netherlands)

On the basis that it's inviting every member to do their own thing I'd agree but the EU Commission has been sadly lacking in offering any type of proposal on this so far beyond "give us call and don't be doing things on your own".

Like the British reaction to Northern Rock, they've showed up very late to the party and are now making noises to remind people of their relevance. The British reaction appears to date to be more directed at the fact that not all banks here are covered. As for the Germans well they've already done their own thing anyway and the Swedes have been through this once already.

TBH I am inclined to think that they will all want to be part of an EU solution, some of which may come to light after the Big 4 get together at the weekend.

is_that_so · 01-10-2008 10:50PM

SteveC wrote: »

Can someone answer me this:

The top Irish banks have been given a state guarantee for €100k per account.

This guarantee is being given by the Irish government - and is ultimately coming from the pocket of the Irish taxpayer.

Why then are our European neighbours who are flocking to put their savings in our banks being afforded the same guarantee?

The guarantee is on the bank and whoever has an account in it.
No taxpayer money is involved unless the banks goes belly up, which is why the guarantee is being offered in the first place.

Steve · 01-10-2008 11:02PM

is_that_so wrote: »

The guarantee is on the bank and whoever has an account in it.
No taxpayer money is involved unless the banks goes belly up, which is why the guarantee is being offered in the first place.

Forgive me - I don't quite understand. If the bank goes 'belly up', the government bails them out - yes?
They bail them out with taxpayers money (what else do they have?). All the English/ French/ German people who have put their savings in AIB/BOI/ etc also get bailed out bt the Irish taxpayer....

Please tell me I've got it wrong....

Irish Govt guarantees banks for two years

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