Government guarantees all deposits in Irish banks

Brendan Burgess

Brendan Burgess

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According to RTE news, the Irish government has guaranteed all deposits and loans of the following financial institutions:

AIB
Bank of Ireland
Irish Life & Permanent
EBS
Anglo Irish Bank
Irish Nationwide
 
While this is good for shareholders and depositors, it must put the financial stability of the government at risk.

It will also result in an unprecedented level of intervention in Irish banks.

Some possible implications/what should be done:

1) Banks will be told not to pay dividends
2) Irish Nationwide (and Anglo?) may be told not to make any more loans until further notice.
3) All banks will be told to stop lending to property developers
4) Loan to value ratios for home loans may be set at a maximum of 70%.
5) The government will appoint directors to the financial institutions
6) Some limits may be put on executive remuneration.
 
Hi,
How about Halifax, they are a British Bank I know, set used to be part of the Irish compensation scheme? Do they guarantee 100 pc of 100?
Fanny
 
This is fantastic news and as I jumped out of bed to have a quick check on the situation it was exactly what I wanted to hear. People spreading money around various Banks for protection was causing problems. Next up a merger of a few of our smaller banks I would suspect.
 
Only the listed banks are covered by the Irish government's guarantee.

Halifax and First Active are not covered.

Brendan
 
Is it also a possibility that if the banks go bust we will not have access to ready cash (I think it could be several weeks or more before the goverment guarantee actually gives us access to our money), so if everyone takes out cash we could be in a worse state or maybe I should take out a sizeable lump of cash to tied me over the next few weeks and a bit extra if a good oportunity comes along. What do you think?
 
Something like this had to be done and I admire the Government and regulator thinking outside the box and being pro-active rather than reactive. And it certainly is to be welcomed by ordinary depositors.
Having said that I don't think it solves the medium to long term problem. There are still serious concerns about Irish Banks capital. I have already talked to a couple of foreign banks and their reaction is the same. It helps the banks liquidity position (but not sure by how much because they said their credit departments weren't rushing to increase credit lines and they didn't have money to lend anyway) but it doesn't help solve the underlying problem. Irish banks are heavily exposed to Irish and UK residential and commercial property and they see massive losses in these areas. We are not at the end of this by any means. What it does mean is that Irish Banks can now not be allowed fail with this guarantee in place because the taxpayer will be left picking up a massive bill that would make the current budget deficit look like loose change.
 
Brendan said:
Only the listed banks are covered by the Irish government's guarantee.

Halifax and First Active are not covered.

Brendan
Click to expand...

Is that just today's announced measure or are they also not covered by the 20k now 100k guarantee.
 
Any ideas what will happen to the deposit guarantee if one of the banks covered is bought out by a foreign bank within the two year window?
 
At first glance, this seems to be either a stroke of genius or a stroke of madness. A commentator on RTE this morning estimated that the guarantee is worth €500 billion to Irish banks. It beggars belief that the government could underwrite potential liabilities of this magnitude. If it were stung for a tiny fraction of this total, say €10 billion, the effect on the public finances would be enormous.
 
Brendan said:
While this is good for shareholders and depositors, it must put the financial stability of the government at risk.

It will also result in an unprecedented level of intervention in Irish banks.

Some possible implications/what should be done:

1) Banks will be told not to pay dividends
2) Irish Nationwide (and Anglo?) may be told not to make any more loans until further notice.
3) All banks will be told to stop lending to property developers
4) Loan to value ratios for home loans may be set at a maximum of 70%.
5) The government will appoint directors to the financial institutions
6) Some limits may be put on executive remuneration.
Click to expand...
Some very interesting thoughts there, Boss. I see the initial euphoric response in the stockmarket has become somewhat muted. There will be a price for this.

But all the same a brilliant, brilliant move. Wasn't leftie Lee pathetic on RTE, goin' on about hard pressed mortagees etc. One thing for sure no coalition involving Labour would ever have been able to do this.
 
This is ridiculous. If he was going to do this, he needed to do it for irish owned banks. He has given an unfair advantage to these 6 banks (3 of which have huge exposures to property) which and will kill the others.

Actually it should been done at a european level to keep a level playing pitch or done nothing at all.
 
does this mean ulster bank and halifax deposits are still guaranteed up to 100k euro
 
Hi

I have a 12 month fixed term bond with Irish Nationwide. Are these covered by the government gaurantee. ?

Please forgive my ignorance of such matters.
 
ubiquitous said:
A commentator on RTE this morning estimated that the guarantee is worth €500 billion to Irish banks. It beggars belief that the government could underwrite potential liabilities of this magnitude. If it were stung for a tiny fraction of this total, say €10 billion, the effect on the public finances would be enormous.
Click to expand...

Its amazing that the Americans wouldnt agree to 700 billion to their banks even if the lower figure suggested above is the true extent of the governments cover
 
My question relates to monies invested in Anglo's 'Capital Account Schemes. I invested my savings in 2 such schemes as the capital invested was guaranteed. The question of whether I might make money on them was obviously always a moot one. At the time of investment it never would have occurred to me that the world banking system might be under threat!
Will an investment/deposit such as this come under the ambit of the Government's protection or am I still out in the cold?
Thank you.
 
A note of caution. The government can "say" that they are guaranteeing all deposits but it still has to pass through the Oireachtas. Imagine the difficulty this will present for some TDs at election time if they vote for a bill that effectively bails out the banls.

Can this really be called a "guarantee" just yet?
 
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