Irish Times - "Is it time to increase protection on savings?"

[Dr Strangelove]

Did any depositor lose anything?

IIRC some >€100k Anglo depositors in the IBRC liquidation in 2013.

 

[TomEdison]

They weren't great options and avoiding the mess in the first place with better regulation would have been the better path not taken. But looking back and burning the bond holders feels a little bit like a Brexit moment i.e., short term gain (or rather respite) but at a cost of long term pain.

Sure. I don't actually have a strong view on whether bailing out the banks was the better call. My point is just that these are two very different calls.

 

[Dr Strangelove]

The EU and national framework for bank resolution has changed completely since 2008.

 

[Lightning]

IIRC some >€100k Anglo depositors in the IBRC liquidation in 2013.

Yeah. There were 394 depositors in Anglo/IBRC whose deposits did not transfer to AIB. AIB did not take Anglo/IBRC deposits in long-dated term deposits - god knows why - maybe AIB systems could not support. Worse AIB told these depositors that the money would move and then changed their mind and said it would not move. Anyway, of the 394 depositors left, a small number had deposits in excess of 100k - they were told to put in a claim with the NTMA as an unsecured creditor for the amount above 100k - I wonder if they ever got any money back.

 

[Dr Strangelove]

maybe AIB systems could not support.

I had some old Irish Nationwide deposits with IBRC which were taken by one of the retail banks (I can’t remember which) in 2013.

I needed them for a house purchase later in 2013. The process for withdrawing them was very slow and they more or less admitted to me over the phone that the systems had been a problem.

As I said before, the whole EU framework for bank resolution has changed completely since and all deposit taking institutions have to have systems in place to allow for smooth transfer of deposits at resolution.

 

[Brendan Burgess]

So the state gave the money to the banks, who in turn gave it to the depositors.

So who was bailed out again?

I have been banging on about this for year. The banks were not bailed out. The bondholders and depositors were bailed out.

So it's much more correct to say that the Credit Unions were bailed out, not the banks.

Shareholders in the banks lost everything.

 

[Brendan Burgess]

AIB and BOI were both toast in 2008.

And the State effectively went bust trying to save them.

Is this correct?

The state made a profit on BoI as far as I can recall.

They may have lost a bit on AIB. Actually this would be a good time to do a final account as the state has now more or less disposed of its shares.

The huge loss was Anglo followed by Irish Nationwide. These banks paid higher interest rates to depositors for the higher risk involved and these depositors should not have been bailed out.

 

[Dr Strangelove]

The state made a profit on BoI as far as I can recall.

Now factor in the near-decade of increased cost of state borrowing that resulted.

 

[Towger]

Option A may not have to require the bank physically closing. The government could nationalise the buildings, employees and systems of the bank. Keeping the bank going under a different name, so effectively business as (near) normal for most customers.

My Father-in-law lost almost all his money when banks in his country went bust. I worked it out as about 150k USD in 1980's money. He would tell me stories about it. He wrote a letter of complaint to the president. Only later to discover people could be disappeared for same. Letting the banks go bust still has a knock on effect. One effect was lots of small banks were formed. People spread their money across all banks, to make best use of the government guarantee limit.

 

[bkenn14]

Now factor in the near-decade of increased cost of state borrowing that resulted.

lot more to factor Than the high interest rates the state paid to service the money borrowed
You also have to factor in the states policy of setting up Nama
If you go back and look at old post you will see the state went out of its way to increase house prices to help stop defaults on bank loans,

 

[charlie007]

The huge loss was Anglo followed by Irish Nationwide. These banks paid higher interest rates to depositors for the higher risk involved

That point was of course not really appreciated back then.
And we all assumed that 'Bank shares were as safe as houses!'

Middle-class fuming as life savings vanish

Things are bad, we all know that. Share prices crashing, pension values have been obliterated and many people's savings have either been wiped away or severely damaged by the recent international financial crisis.

www.independent.ie

Love this bit from the above article.....

In short, property has still been the best place to put your money. Although prices have fallen by between 10-15 per cent on average, and may still fall more, they have not been decimated like stock prices or pension values and are likely to increase again substantially within 12 months.

And I just read this bit....

While every sector is hurting right now, those who bought property must take some consolation that their losses are not as bad as people who put their money into other things, and that the value of their investment is likely to rise substantially in the coming months. Yes, there may be short-term pain, but if you invested in property you will be all right in the end.