At this point in time Irish banks have some of the best T1 ratios in Europe and when you combine that with the fact that they have little exposure to Greek/Spanish/Italian sovereign debt, it is kind of hard to see why you'd consider them to be more risky than a bank with a lower T1 ratio and exposure to this sovereign debt!if he has not diversified some of his assets away from Irish banks, he has no appreciation of risk.
All in all I would think his strategy is as good as anyone else's ideas.
That's an interesting one - first time I have seen this mentioned.As I understand it, from legal point of view the best the Irish government could do is introduce a new currency - for as long as the Euro continues to exist they would have no authority to convert Irish deposits held in Euros. Only the people of Europe can do that with a treaty change, which in Ireland's case would require a referendum!
At this point in time Irish banks have some of the best T1 ratios in Europe and when you combine that with the fact that they have little exposure to Greek/Spanish/Italian sovereign debt
Hi Jim
Do the Irish banks have an exposure to Irish government debt?
Agreed. I posted what Alan said in an attempt to to balance what I see as hysteria. The assumption on this site and others seems to be that anyone with money in Irish banks/Ireland is a fool. Stirred up by the likes of Eddie Hobbs and Jill Kerby (who I hear was on liveline yesterday preaching her doom and gloom yet again)At this point in time Irish banks have some of the best T1 ratios in Europe and when you combine that with the fact that they have little exposure to Greek/Spanish/Italian sovereign debt, it is kind of hard to see why you'd consider them to be more risky than a bank with a lower T1 ratio and exposure to this sovereign debt!
As I understand it, from legal point of view the best the Irish government could do is introduce a new currency - for as long as the Euro continues to exist they would have no authority to convert Irish deposits held in Euros. Only the people of Europe can do that with a treaty change, which in Ireland's case would require a referendum!
All in all I would think his strategy is as good as anyone else's ideas.
Fairly patronising comment Ciaran. Maybe Alan hasn't read "how to be a good little sheep" either. While diversification seems like a good strategy, diversification into what?CiaranT said:Well said, Brendan. Alan clearly has not attended diversification 101 classes.
Maybe Alan hasn't read "how to be a good little sheep" either. While diversification seems like a good strategy, diversification into what?
Playing up dooms day or 'contingency' or 'worst case scenario' planning?For the last few years the trend has been to play up dooms day on AAM with all sorts of ideas around moving your money out of ireland.
Could someone tell me how much I would have lost if I moved 100 euro into a sterling account in UB for example two years ago as oposed to saving in a fixed term deposit account that had a particular rate of interest then, compound this with the fact that I convert my money back to euro and where would I be.
Open an account in a bank outside the eurozone in a non-Euro currency
Pro
- In the event of a Eurozone break up and an Irish devaluation, your sterling/dollar/other deposits are likely to retain their purchasing power more than Irish currency.
Risk
- You will pay to transfer your money into another currency four times over. First, you will not get the wholesale FX rate when converting from Euro to another currency, so even if foreign exchange rates were absolutely static, you would lose on the margin between the wholesale FX rate and the rate you actually get. Second, you would need to pay transaction fees. Third and fourth, you will pay the FX margin and transaction fees in the future whenever you need to convert back to whatever currency is in use in Ireland.
- You are subject to fluctuations in foreign exchange.
- Currency values are not completely decoupled. A collapse in the Eurozone is likely to hit other countries - especially the UK. There is no guarantee that a Eurozone breakup would not have an impact on the value of other currencies especially Sterling.
- There is also the risk of default by the bank you have your deposit account in.
- The interest rates in "safe" havens may will be a lot less that those available in Ireland.
yes its good to diversify, but couldn't keeping a few pound in irish banks be part of the diversification plan.
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