who controls the post offfice deposits?

D

dockingtrade

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Who controlls the PO deposits, saving certs, bonds and prize bonds? It doesnt give out loans so it must be one of the most solvent and liquid institutions in europe or is that cash controlled by the govt.

In the case of a default by the govt would the post office cash be at risk?
Its never mentioned as a source of funding for the govt. what does the saving certs and term bond cash get used for exactly ? If its to finance the the country why is it not mentioned as a source of funding ie pension reserve x amount, finance rised through sovereign bonds y amount
 
jpd said:
Yes - see here [broken link removed]
Click to expand...

thanks for that, interesting.

Why dont the govt issue annual bonds tax free interest at 4% or 5% to Irish citizens? So lower interest repayments and the cash stays in the country.
 
That would probably suck in even more retail deposits from the banks, and because the Government guaranteed the banks, it would just move the problem down the line and not solve anything.
 
Does State Savings have any solvency requirements, or is it the VHI of the deposit world?
 
I don't understand your point?

An Post act as a deposit-taker on behalf of the NTMA, who borrow funds from savers.
 
my point is, if everyone who deposited money through An Post went in to withdraw their money, how much of that money would actually be available, 20%, 45%, 100%??? Does NTMA need to maintain a defined % of deposits on reserve?
 
Yes on rereading the OP I see the point. Where is the money day to day so to speak. Is it used to pay gaurds, nurses and social welfare. If Ireland runs out of money is this the riskiest kind to hold. Of course they are gaurunteed like banks but presumably banks have some cash knocking aorund adue to mr elderfields solvency raios although given media reports you wonder.

So do the regulators solvency ratios apply to An Post, First Direct is regulated like a bank but what about the entire operation so to speak?
 
I see, you are referring to a reserve or liquidity requirement.

Don't know for sure..

But the NTMA always have a cash balance, so I suppose they use that to meet withdrawals. Or else they borrow from somewhere else.
 
From the NTMA's annual report:​


RETAIL SAVINGS
The NTMA has a number of schemes designed to attract funds from domestic private investors.
These are Savings Bonds (3 year), Instalment Savings (5 year), Savings Certificates (5½ year), Prize Bonds and Post Office Savings Bank Deposit Accounts. These products, and the National Solidarity Bond issued in 2010, are now branded as “State SavingsTM” to reflect that they constitute a direct obligation of the Irish Government.​



During 2009 there were net inflows of €1.76 billion into the retail savings products, the highest level of inflows in any year since the establishment of the NTMA in 1990. At end-2009 the total amount outstanding was €9.3 billion, equivalent to 12 per cent of the National Debt. A further €346 million was outstanding in accrued interest.​


With the exception of Prize Bonds, the schemes are operated by An Post on behalf of the NTMA. Prize Bonds are operated by the Prize Bond Company Limited – a joint venture between An Post and FEXCO, a financial services company.​
 
People with certs and bonds with An Post have to wait until the maturity date so they can`t all take their money out at once.Even if depositors all decided to withdraw their money over a number of years, the government could always meet depositors demands by raising more from taxation. Don`t forget the government has enormous tax raising power.
 
People with certs and bonds with An Post do not have to wait until the maturity date - they can be withdrawn at any time.
 

So there is no liquidity requirement, it is dependent on the liquidity of the state which is tetering on the edge?
 
In any case, there isn't a bank in the world with enough liquid reserves to stem a run on the bank - that would be contrary to the definition of a bank.

Banking is a confidence game, where you get money from people who have some to spare or who have money not immediately required and lend it to others who have needs they can't meet from their own resources.

But without banking, most of our modern world would stop working so it is incumbent on govts to make sure we have a working banking system. The Irish Gov't and regulator took their eye of the ball and now they are struggling to regain control.
 

Indeed but the new regulator has enfoerced and strengthened solvency ratios hence the problems in the Quinn group. These apply to all the high st banks and other financial institutions. What we are trying to gauge is whether An Post (as opposed to One Direct it's banking subsidary) is covered by such ratios. It would seem it is not on the basis that much of it's funds are simply national debat under another name.
 
If the NTMA are fully funded in terms of paying Garda, teachers, nurses and let's not forget politicans until mid 2011, then I guess the NTMA has enough cash somewhere to cover my deposit right now!!
 
From : http://www.prizebonds.ie/corpinfo.html

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