There is two spokes to this puzzle, one logic, the other emotional ( deep fear), classic head vs heart. NR has I think abot £113bn in loan assets mostly mortgages. Its deposit base is a tiny fraction of this, less than 25% at £24 bn including the Irish deposit arm. This means the balance sheet is perfectly safe. Brendan refers to Equitable Life, but EL had an Enron style book keeping scandel ie falsified books and its With Profit model was a lot more complex than a simple savings and loans model which is NR as a recently demutualised Building Society.
Its problem is cash flow because of its exposure to the dried up wholesale money market hence it vulnerable to a takeover today or next week as its share price falls. Deposits are, then based on available info and supported by the regulator, perfectly safe.
On the emotional side there is the deepest fear in financial investment, a bank going bust and a deposit loss above the compensation scheme. The last one was Arab bank BCCI. This fear outweighs logic for most people who would be better for peace of mind to switch.
That leads to the question of to whom and which other Irish banks are also skating on thin liquidity. We don't know but I'd be unsurprised if Irelands most aggessive lenders like Anglo Irish aren't a tad nervous especially given their exposure to Irish developers. Safety first I think where credit rating ( now iffy) is king. NIB are now a branch of Danske regulated by the Danish regulator and maybe worth a look but both Irish main banks are sound IMHO.
In another sense this comes as a wake up call to every one not to take bank deposits for granted and to show due deference to credit rating and strength when choosing banks and not just rates which has been the focus everywhere including in AAM. Maybe from now on AAM should display S&P or Moody rating when displaying rates and show the lead to the print media?
. I agree with Shane's sentiments.