Big Private v Irish Regulated

Sonnenblumen

In theory all banks/Financial institutions are potential vunerable to a run on reserves as was evident by the recent Northern Rock Run. Now looking at matters from an Irish Depositor's perspective, am wondering which of the following offers best security to the Depositor:

(a) a foreign owned (& foreign regulated) private bank with a strong credit rating or
(b) an irish financial institution which is regulated by IFSRA.

Can anyone say with some certainty which of these options offers best security to an Irish customer.

Time Magazine

Regardless of whether anyone thinks they say it with certainty, nothing on this forum can be said with any certainty by default.

Pick up hints and tips here, but not advice.

Also, I think you're generalising too much, Sonnenblumen. Strong credit ratings may not be all that accurate and there's a hell of a difference between some financial institutions approved by IFSRA and AIB/BoI. That said I am sure there are more secure banks in the world than AIB/BoI.

I personally wouldn't sweat having money in either of the above.

Sonnenblumen

Let's be specific, does a foreign bank with a Triple 'A' rating (but non IFSRA regulated) offer more security than the IFSRA regulated Irish bank?

In theory another run is possible, the Northern Rock was rescued by BoE but if it happens again with another bank, well Triple'A' status might not be sufficient for Irish depositors?

I might just enquire with IFSRA.

BendiBus

AAA by itself may not mean much, but if this foreign private bank is regulated by another reputable authority in another reputable country, and if that other reputable country operates a superior deposit protection scheme to the Irish one, then the foreign private bank is safer.

IMO.

A Random Walk

Most regulation is driven by EU regulations and implemented by the individual regulators. That's how for example Rabobank can operate in Ireland while being Dutch regulated and is how Irish depositors can be protected by the Dutch deposit protection scheme. There should be no huge differences in the application of regulation between regulators within the EU.

Ratings are different, they're assigned by private rating companies.

A European depositor of a bank regulated by a regulatory authority within the EU is protected by the protection scheme offered by that regulator. In terms of "safety", it makes no difference whether that's IFSRA or the Dutch or the FSA.

After that yes perhaps ratings are a good way to look for protection. An AAA rated Irish bank should be just as safe as an AAA rated Dutch bank as the regulation should be very similar.

The credit crisis we're seeing currently however has been sparked in large parts by institutional distrust of the rating systems.

Sonnenblumen

According to the IFSRA website, Irish Depositors are only entitled to 90% or maximum € 20,000.00 compensation. Customers of a DGS (Dutch ) regulated bank would be entitled to the 100% of the first € 20,000 and 90% of the second € 20,000.00.

It would be interesting to find out how IFSRA compares to other Fin Reg European agencies. Certainly in comparison to the Dutch, it fails Irish customers badly.