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Who Guarantee Deposit Guarantee Scheme?

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  • 09-02-2011 4:25pm
    #1
    fleet
    Registered Users Posts: 546 ✭✭✭


    Hi All,

    doing a bit of research for the 'aul lad.

    He wants to put away a bit of cash, either on on-demand or short term (1-2 year).
    Currently it's in Rabo @ 2.0%
    KBC have big adds for 3.5%, sounds like a no-brainer.

    However he's concerned about moving the money to a bank that's guaranteed by the Irish government.

    Personally I don't think it's an issue, the last thing the gov will do is burn depositors; but he's a wary chap and wants to make sure the buck doesn't stop with them.

    What happens if the everything goes to pot for Ireland, we default, democracy falls the banks totally fail?

    Does the EU underwrite the deposits or do they go up in smoke?


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  • Options
    #2
    dotsman
    Registered Users Posts: 3,636 ✭✭✭dotsman


    fleet wrote: »
    What happens if the everything goes to pot for Ireland, we default, democracy falls the banks totally fail?
    Then cash is the least of his worries. Tinned food and the ability to hunt/grow future meals would be his most serious concerns. Seriously!!!


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    #3
    hmmm
    Registered Users Posts: 11,205 ✭✭✭✭hmmm


    fleet wrote: »
    Does the EU underwrite the deposits or do they go up in smoke?
    The Irish government guarantees the money, the EU has no involvement.


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    #4
    dotsman
    Registered Users Posts: 3,636 ✭✭✭dotsman


    hmmm wrote: »
    The Irish government guarantees the money, the EU has no involvement.

    Actually they do. In the sense that, as well as the Irish Government Guarantee, there is also an EU guarantee up to €100,000 irrespective of the Irish one.


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    #5
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,281 Mod ✭✭✭✭Jim2007


    fleet wrote: »
    Currently it's in Rabo @ 2.0%
    KBC have big adds for 3.5%, sounds like a no-brainer.

    Nobody gives you money for free! A higher return always means more risk of some type, so before you go for your "no-brainer" make sure that you are comparing like with like. Read all the details of the agreements you are talking on and not just the advertising material. Somewhere in there there must be a reason why the rates are so out of whack and once you have found the reasons make sure they are acceptable to you.

    Jim.


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    #6
    hmmm
    Registered Users Posts: 11,205 ✭✭✭✭hmmm


    dotsman wrote: »
    Actually they do. In the sense that, as well as the Irish Government Guarantee, there is also an EU guarantee up to €100,000 irrespective of the Irish one.
    There is no EU guarantee - where are you getting this from?

    As an aside, this is one of the problems with a SF/"burn the bondholders" approach - the guarantee would be invoked in that event and the government would not have the money to guarantee bank deposits.


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  • Options
    #7
    Kennie1
    Registered Users Posts: 302 ✭✭Kennie1


    Eu guarntee was €20000.00 up to the 06/10/2008 but was increased to 50,000 on the 07/10/2008. Investors were looking for 100000 and EU commission agreed to look at this and entered into a consultive process but the german upper house rejected this proposal on the 24/09/2010. Dont know where it stands now though?


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    #8
    dotsman
    Registered Users Posts: 3,636 ✭✭✭dotsman


    hmmm wrote: »
    There is no EU guarantee - where are you getting this from?
    ...


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    #9
    JTMan
    Registered Users Posts: 5,540 ✭✭✭JTMan


    There is no EU guarantee. This is a common mistake.

    If you have deposits in an insolvent Irish bank you are guaranteed by the bankrupt Irish state.


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    #10
    benagain
    Registered Users Posts: 60 ✭✭benagain


    the taxpayer as ever we cover every bad punt a spectulater takes , we take all the risks they lose we pay , they win we still pay , only in ireland


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    #11
    JTMan
    Registered Users Posts: 5,540 ✭✭✭JTMan


    We will pay until default occurs, which is totally inevitable, and the shambolic Irish banking system collapses.


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    #12
    dotsman
    Registered Users Posts: 3,636 ✭✭✭dotsman


    Fungus wrote: »
    There is no EU guarantee. This is a common mistake.

    If you have deposits in an insolvent Irish bank you are guaranteed by the bankrupt Irish state.
    Please see post above.
    Fungus wrote: »
    We will pay until default occurs, which is totally inevitable, and the shambolic Irish banking system collapses.
    Wow:rolleyes:


  • Options
    #13
    noworries
    Closed Accounts Posts: 187 ✭✭noworries


    @Dotsman - I would greatly appreciate a link that shows a guarantee provided by the ECB for Irish Banking deposits. Thanks.

    From your link above
    On 12 July 2010, the Commission adopted a legislative proposal for a thorough revision of the Directive on Deposit Guarantee Schemes. It mainly deals with a harmonisation and simplification of protected deposits, a faster payout, and an improved financing of schemes. These proposed amendments follow urgent legislative changes that the Commission proposed in 2008 and that entered into force early 2009. The proposal is accompanied by a report.

    Links to EU directives and aspirational funding by 2020 don't count. As pointed out by previous posters, there is NO EU funded deposit guarantee scheme in place. i.e If it were called for I could not go to the ECB and say 'right Herr Banker, you owe me 100,000 and I would like it in crisp twentys please'. Not going to happen - just like if it were called for
    Ireland Inc does NOT have either the cash or the financial clout to borrow the cash to pay out on the deposit guarantee here. The possible downgrading of deposits by Moodys last week
    of ALL Irish based banks echoes this point
    http://news.ie.msn.com/business/article.aspx?cp-documentid=156101121


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