Deposit guarantee

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coolaboola12

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Is it safe to hold more than 100k on deposit with a pillar bank? Or is it recommended to open multiple current accounts
 
Your deposit to the maximum of 100,000 EUR per covered institution is guaranteed by the Deposit Guarantee Scheme Deposit Guarantee Scheme Ireland , if you have deposited your money Protected Deposits (depositguarantee.ie) with a covered institution Covered Institutions | Deposit Guarantee Scheme. Certain deposits in excess of 100,000 EUR – temporary high balances – may be covered in specified situations.
So to protect your money you should not deposit more than the 100,000 EUR threshold in a single institution (unless it meets the temporary high balance criteria).
 
PMU said:
Your deposit to the maximum of 100,000 EUR per covered institution is guaranteed by the Deposit Guarantee Scheme Deposit Guarantee Scheme Ireland , if you have deposited your money Protected Deposits (depositguarantee.ie) with a covered institution Covered Institutions | Deposit Guarantee Scheme. Certain deposits in excess of 100,000 EUR – temporary high balances – may be covered in specified situations.
So to protect your money you should not deposit more than the 100,000 EUR threshold in a single institution (unless it meets the temporary high balance criteria).
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so what do people do with more than 100k ? open multiple accounts and pay fees on each ?
 
You need to ask yourself why you have more than 100k on deposit in the Irish banks in the first place.

There are much better options in the best buys list.
 
coolaboola12 said:
so what do people do with more than 100k ? open multiple accounts and pay fees on each ?
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People open multiple accounts, with all the Irish guaranteed banks, including the State Savings scheme.
I don't think they need to be unduly concerned. The Irish government would rather see every new born baby sacrificed on a pagan altar, before letting the Irish bank's wealthy depositors lose any money.
 
coolaboola12 said:
Is it safe to hold more than 100k on deposit with a pillar bank? Or is it recommended to open multiple current accounts
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Why even contemplate the risk? You will get 100% protection and a much better rate of return by shopping around. Win win!
coolaboola12 said:
so what do people do with more than 100k ? open multiple accounts and pay fees on each ?
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Yes and no.

Take a look at the best buys. By the time you start hitting deposit accounts that incur a fee you'll have protected many hundreds of thousands of euros.

Best Buy - Savings Best Buys

Savings Best Buys: There are 3 savings best buy threads on AskAboutMoney that are updated frequently. Instant Access and Notice Accounts - Lump sum variable rate savings. Fixed Term Deposits - Fixed Lump Sum Term Deposits from a few months to a few years. Regular Savings - Smaller sum...
www.askaboutmoney.com

The effort required to do all of the above is about the same as logging on here.
 
coolaboola12 said:
I dont like those online neo banks as i prefer bricks and mortar for peace of mind
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If anything the last 16 years in Ireland have shown that bricks and mortar banks fail just as badly as online banks.

When all are covered by the equivalent guarantee -and you keep your exposure below the threshold - is there not the same peace of mind?
 
skrooge said:
If anything the last 16 years in Ireland have shown that bricks and mortar banks fail just as badly as online banks.

When all are covered by the equivalent guarantee -and you keep your exposure below the threshold - is there not the same peace of mind?
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People are always on this forum and others complaining about lack of customer service, money getting lost etc. I wouldn't put my money anywhere that doesn't have a physical bank in this country

By using a foreign online bank then you are at the mercy of that banks government being able to afford the deposit guarantee, I'd rather trust the Irish govt
 
Holding hundreds of thousands of euro in pillar bank current accounts is nonsense in my opinion.
 
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coolaboola12 said:
People are always on this forum and others complaining about lack of customer service, money getting lost etc. I wouldn't put my money anywhere that doesn't have a physical bank in this country

By using a foreign online bank then you are at the mercy of that banks government being able to afford the deposit guarantee, I'd rather trust the Irish govt
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Plenty of people complain about the service from Irish banks. Not sure the non-IE banks are sufficiently different than IE banks to warrant one lot over another.

I trust the Irish government to a degree but look back 15 years and is there a strong argument to think the Irish State is going to be better placed to pay out than another EU government? The Troika didn't turn up here for a holiday - we were broke. They lent a lot of money to us to put into our banks so that the DGS wasn't called upon. That same support would be provided across Europe.

I'm not suggesting that will happen again but we are a small open economy. We're reliant (again) on a small number of sectors fiscally and for growth. It is a risk to at least consider.

Putting all that into context and given you've already have exposure to Ireland and Irish banks would it not make sense to diversify.
 
There are times when people have large amounts of cash and where their circumstances make sense for it to remain in cash (or the like) for a period of time (e.g. between selling property or coming into funds and at a later date purchasing another property or acquiring an asset). In many such cases, equities or other investments may be unsuitable.

The DGS is NOT a liability of the Irish Government, it is administered by the Central Bank and funded by the credit institutions covered by the scheme.

There is no disadvantage to spreading your money over a number of institutions to spread/mitigate the risk, however small you may perceive it to be.

A key question however is whether or not you are prepared to tie the money up for any length of time.

Holding deposits in multiple Irish Banks does not necessarily mean paying fees to all of them.

In brief, the options are:
  • Demand deposits with the Irish Banks, €100,000 each - Money available on demand, very low interest rates
  • State Savings - Prize Bonds, Up to €250,000 (€500,000 for a joint A/C) - Money available on demand after initial 3 months, low interest rate
  • Term deposits with Irish Banks (6,12,18, 24, 36 months) and other State Savings Term Products - Money tied up for the duration, better interest rates. Money may in some cases be accessed early, with significant penalties. Check T&Cs
  • Demand or Term Deposits with non-Irish EU banks (e.g. BUNQ, Raisin, etc etc). Far better rates available. For some, then absence of physical branches and face to face communication is unacceptable. For others, in terms of service levels, it is just the other side of the same coin.
The current rates are available in the best buys threads.
 
Freelance said:
There are times when people have large amounts of cash and where their circumstances make sense for it to remain in cash (or the like) for a period of time (e.g. between selling property or coming into funds and at a later date purchasing another property or acquiring an asset). In many such cases, equities or other investments may be unsuitable.

The DGS is NOT a liability of the Irish Government, it is administered by the Central Bank and funded by the credit institutions covered by the scheme.

There is no disadvantage to spreading your money over a number of institutions to spread/mitigate the risk, however small you may perceive it to be.

A key question however is whether or not you are prepared to tie the money up for any length of time.

Holding deposits in multiple Irish Banks does not necessarily mean paying fees to all of them.

In brief, the options are:
  • Demand deposits with the Irish Banks, €100,000 each - Money available on demand, very low interest rates
  • State Savings - Prize Bonds, Up to €250,000 (€500,000 for a joint A/C) - Money available on demand after initial 3 months, low interest rate
  • Term deposits with Irish Banks (6,12,18, 24, 36 months) and other State Savings Term Products - Money tied up for the duration, better interest rates. Money may in some cases be accessed early, with significant penalties. Check T&Cs
  • Demand or Term Deposits with non-Irish EU banks (e.g. BUNQ, Raisin, etc etc). Far better rates available. For some, then absence of physical branches and face to face communication is unacceptable. For others, in terms of service levels, it is just the other side of the same coin.
The current rates are available in the best buys threads.
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If a large bank fails then then deposit guarantee isn't large enough in any country to cover that so then it would fall upon the govt to cover the losses
 
coolaboola12 said:
If a large bank fails then then deposit guarantee isn't large enough in any country to cover that so then it would fall upon the govt to cover the losses
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There was a lengthy discussion in another thread some time ago on whether or not the DGS would ultimately be supported by the Govenrment on a last resort basis. As far as I remember there were a number of viewpoints and a lot of conjecture. I don’t believe anybody produced evidence to substantiate the view that the government would be on the hook.

In any event it’s a side issue to the topic of the thread and hopefully unlikely to arise.
 
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The government (that is the taxpayers) bailed out the deposit holders in Anglo

I imagine they would do the same for AIB and BOI
 
coolaboola12 said:
But why introduce the 100k limit then ? Why just not say everything is guaranteed.
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Because in real life, nothing is guaranteed.
When Cyprus went through their financial crisis a few years after Ireland, large depositors lost some money. I don't know the details, but I think values over €100,000 were converted to equity, which presumably fell in value.
The €100k limit gives enough assurance to most people to ensure that there is trust in the safety of banks, and at the same time, gives the banks and government enough room to bail in high value deposits if necessary. IMHO.
 
Persius said:
Because in real life, nothing is guaranteed.
When Cyprus went through their financial crisis a few years after Ireland, large depositors lost some money. I don't know the details, but I think values over €100,000 were converted to equity, which presumably fell in value.
The €100k limit gives enough assurance to most people to ensure that there is trust in the safety of banks, and at the same time, gives the banks and government enough room to bail in high value deposits if necessary. IMHO.
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Yes agreed so it looks like it's prudent to split anything over 100k into multiple institutions
 
coolaboola12 said:
Yes agreed so it looks like it's prudent to split anything over 100k into multiple institutions
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Let’s take four scenarios, and assume that the temporary high balance provision does not apply:
  1. Deposit €100,000 with AIB, €100,000 with BOI and €100,000 with PTSB
  2. Deposit €100,000 with AIB and €200,000 in Prize Bonds
  3. Deposit €100,000 with AIB, €100,000 with BOI and €100,000 with BUNQ
  4. Deposit €300,000 with AIB
In terms of guarantees, is there a difference in the four scenarios? Yes, the first three are guaranteed in full. The fourth is explicitly guaranteed up to €100,000, with any further cover dependent on how the scenario plays out after the institution gets into difficulty. You may get all your money back and most likely will, but that is not the same as having it guaranteed.

jpd said:
The government (that is the taxpayers) bailed out the deposit holders in Anglo

I imagine they would do the same for AIB and BOI
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We can imagine whatever we want. That doesn’t make it fact. And the past as we so often hear is no guide to the future. Here is the link to the previous lengthy discussion on whether or not the DGS is a state guarantee. It’s clear from that discussion that while there is recourse in the event of a shortfall in a DGS to borrowing, other European DGS etc. at no point was it definitively shown that a DGS is backed by a state guarantee.
 
Banking is a con trick - if everyone turned up at the bank looking for their money, most would be disappointed and the bank would collapse

The DGS scheme is a cover to try and ensure that does not happen but ultimately the state would have to decide whether to step in and throw taxpayers money in and hope to recover it by selling the bank's assets (loans) or by recovering the loans over time.
 
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