Guarantee Limit for Merged Banks

I have significant amounts in deposit accounts with both Anglo and EBS. Given that they’re now both owned or being transferred to AIB, where I also have some smaller amount of cash, how long will they be covered separately by the €100K guarantee limit (not the time-limited unlimited amount one). I distributed my savings to keep them under different banking licenses and I’m a bit miffed that they’re now all being mashed into one.
Anybody know anything about this?

my heart bleeds… :smiley: :angry:

you need to look at banks with foreign guarantees

National Irish Bank
Rabobank Direct
Northern Rock

that should do it

Nice problem to have 8DD

I’m already using Northern Rock here and also have some savings in the UK in an account I’ve had for ages (I’m British). I’m just annoyed because I only opened the EBS one in the autumn and it’s irritating to have the rigmarole of opening accounts again so soon.
If the government had given Anglo to BoI and Irish Nationwide to AIB, instead of vice versa, I wouldn’t be in this situation.

Why not just transfer all your deposits to the NR account and get them our of Irish banks where you are subject to default risk?

Hmm, I’d still rather not have all my eggs in one basket. I guess substituting Rabo and NIB for Anglo and EBS would serve the same purpose.
I still wish EBS had been sold to someone relatively sensible like HSBC or Santander, rather than given to AIB, but then I guess they’re in better shape precisely because they didn’t buy crud like that or build up that kind of loan book.

BTW, what would be the implications for Irish deposit accounts of default/restructuring without leaving the Euro? I’m intending to keep my cash for a year or two while I wait for the dust to settle in the property market then buy a house for cash in 2012-14 and keep some change. Could the government impose withdrawal restrictions without breaking EU free capital transfer regulations? I wouldn’t intend to move the money outside the Eurozone, or even Ireland, though it might end up in a foreign-owned bank.

IMF Reverses Position on Capital Controls -> online.wsj.com/article/SB1000142 … 79930.html

Might be worth keeping an eye on.

I recently stumbled across the following clarification at the NCA.

nca.ie/index.jsp?p=139&n=214&a=27 * notes 1 & 2 are the relevant bits.

It seems that Anglo accounts were simply transferred lock, stock and barrel to AIB, but EBS became a wholly owned subsidiary, operating under its original license, so you can be covered for up to €200K within AIB, as long as half of it is in EBS and the rest in AIB proper, including ex-Anglo accounts. Of course, this relies on the government finding the money for the insurance scheme to pay up and not reneging on the deposit guarantee.

BTW, does anybody recall what was the minimum level that the EU recommended for national deposit insurance schemes a couple of years ago?

One scenario you should pay special attention to is all Irish resident a/c’s with Irish registered banks (which are all currently insolvent) being merged in a single post collapse state owned bank. With the effective guarantee (i.e balance readily accessible) being the old limit, around 22K, per resident. The rest of the balance is either time locked or converted into government bonds i.e a forced loan to the government.

That is what usually happens in these situations.

It’s called financial repression, and your pension will (has already been) be targetted too, not just your wedge. so not alone will your wedge not be guaranteed, it will be expropriated, never to be seen again in all likelihood.

@jmc - resident - implication being that non-resident depositors would no longer be covered?

You make it sound like these situations happen all the time.

Not really. Most non-resident deposits have already left so in the worse case scenario I’d expect the non-resident a/cs to be more readily accessible than the resident ones. So the same 22K limit but less controls over how much money can be accessed. Mainly due to the fact that capital controls will place strict limits on the how and when these depots can be transferred out of the country. All foreign currency will be sold by the Central Bank at very unfavorable exchange rates so they’ll effectively have their 20%/30% capital export levy. I think during the various Sterling crises of the 40’s and 50’s the capital export premium in the UK for non government sanctioned transactions reached effective rates of almost 50% at times. Buy dollars at 4.20, sell at 2.60, black market rate 3.80. Slap on a 20% super tax on the transaction. That sort of thing.

Expect a lot of interesting (and very creative) export/import enterprises to spring up if capital controls are introduced. Depending on how they word the sanctioned transaction regulations and the exchange rate schedules for these transactions I’d expect it to be fairly easy to move large sums in and out of the county. But not for the little people.

Situations like the current Irish banking crisis have happened (although usually not to such an extreme degree) on at least two dozen occasions over the last hundred years. Quiet a few of them in Europe during the 1930’s and in South America during the 80’s and 90’s.

A currency peg crisis is also a fairly regular occurrence. Again mostly in South America in recent times. Currency unions always end in crisis and their eventual demise. This has happened almost half dozen times over the last 150 years.

The book “This Time is Different”…

amazon.com/This-Time-Different-Centuries-Financial/dp/0691142165

… catalogs the long long litany of the results of short term political expediency trumping long term national prudence. It always ends in tears. Always.

Even McWilliams is talking about capital controls and the State ’ borrowing ’ your savings

davidmcwilliams.ie/2012/01/0 … -recession