In the event of another bank bailout would deposits be hit?

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kdoc

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Jill Kerby mentioned this on a recent radio show. Also, Colm McCarthy raised this spectre in the Sunday Independent: "...the banks themselves would be unable to raise fresh equity from the market, so any new hole in bank balance sheets could only be filled by writing down depositor balances ..." Scary.
 
There are in new EU "bail in" rules that mean depositors over 100,000 EUR might be hit if there is a future bank bail out.
 
Hi, If there was another bank bail out and deposits were hit, would healthy bank's depositors also be hit?
Cheers
 
Yes, but there are relatively healthy non-Irish banks trading in Ireland. Also, even among the Irish banks, some are healthier than others. So it's still an interesting question -- would the cost of a bail-in be spread across depositors in all banks trading in Ireland. If so, does it make a nonsense of the idea of getting a lower interest return for taking a lower risk, since effectively everyone's at equal risk anyway?
 
dub_nerd said:
Yes, but there are relatively healthy non-Irish banks trading in Ireland. Also, even among the Irish banks, some are healthier than others. So it's still an interesting question -- would the cost of a bail-in be spread across depositors in all banks trading in Ireland. If so, does it make a nonsense of the idea of getting a lower interest return for taking a lower risk, since effectively everyone's at equal risk anyway?
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A bail-in should be institution specific. The new bain-in rules specify the order of source of capital for any additional capital requirements on an institution by institution basis.
 
Where there could be a knock on impact would be if the deposit guarantee scheme was called on and the fund then needed to be replenished by levying a higher charge on the remaining institutions
 
If this was the case and we had a Cypriot scenario, would the safest place for deposits over 100,000 be the Post Office?
 
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