Ovi -
we cover every issue
newsletterNewsletter
subscribeSubscribe
contactContact
searchSearch
Μονοπάτι της Εκεχειρίας  
Ovi Bookshop - Free Ebook
Stop human trafficking
Ovi Language
Ovi on Facebook
WordsPlease - Inspiring the young to learn
Murray Hunter: Opportunity, Strategy and Entrepreneurship
Stop human trafficking
 
BBC News :   - 
iBite :   - 
GermanGreekEnglishSpanishFinnishFrenchItalianPortugueseSwedish
Irish report Irish report
by Euro Reporter
2010-11-16 09:52:23
Print - Comment - Send to a Friend - More from this Author
DeliciousRedditFacebookDigg! StumbleUpon
Exactly how safe are your Irish savings?

Over the past two years Irish, Dutch, Indian, Turkish and Cypriot banks, among others, have offered far more competitive deals to UK savers than many home-grown banks, particularly on longer term fixed-rate accounts. As a result, millions of us have money tied up overseas. After a weekend when Ireland's economic problems have again dominated the headlines, many savers may now be worried about how safe their money is. It is important to remember that even in these difficult times, bank collapses remain rare; but anyone with money in a bank, in the UK, Europe or beyond, should ensure that they know how to claim compensation if a bank did go bust.

In some cases savers would be covered by our own domestic scheme, the Financial Services Compensation Scheme, (FSCS). Under this scheme the first £50,000 is protected. Remember this is a per-person limit, so those with a joint account can protect up to £100,000. But some European banks aren't covered by the FSCS and UK savers would have to apply to the protection scheme operating in the bank's home country – which may not offer the same level of protection.  Savers also need to think about how robust this guarantee is. Millions of savers piled into Icelandic banks when they were offering market-beating rates. On the face of it, these deposits were protected by the Icelandic protection scheme – which itself was regulated by the European authorities. But when the country's banking system collapsed, it emerged that there were insufficient reserves to pay British savers. Thousands in the UK would have seen their savings disappear if our own Government hadn't stepped in and paid out instead.

Although it may seem intuitively more risky to be putting money into banks from countries beyond the European Economic Area, such institutions have to set up a UK subsidiary to offer savings here. This means they are authorised by the Financial Services Authority and are under the jurisdiction of the FSCS. So savers with these banks have the same protection if one of these banks goes bust as they would if one of our high street banks hits the buffers. The protection limits apply per bank, not per account. If, for example, you have £50,000 in an old Abbey account and £50,000 in an old Bradford & Bingley account – both of which are now owned by Santander – your money won't all be fully protected under the FSCS.

To further complicate matters, new European rules introduced at the start of next year (January 1) will ensure all countries with the European Economic Area (which includes all EU countries, plus Iceland, Liechtenstein and Norway) will offer a minimum protection of 100,000 euros. This means that the compensation available under our own FSCS will be raised to match it. At current exchange rates about £83,000 (or £166,000 for joint accounts) will be guaranteed.

*******************************

Irish, Greek budget strains trigger new euro crisis


The eurozone faced its second major crisis in six months on Monday as Ireland admitted it was in talks over its huge budget problems and new figures showed Greece's deficit was even worse than thought. Ireland, while denying it was following in Athens' footsteps by asking for a bailout, said it was in contact with "international colleagues" over its budget crisis, amid speculation that a rescue is imminent. The European Commission also rejected suggestions of a bailout but acknowledged that Ireland's problems are a concern for the financial stability of the whole of the 16-nation bloc that uses the euro single currency.

And following detailed audits, the European Union released revised figures that saw Greece's deficit for 2009 rise to 15.4 percent of gross domestic product, a big jump from the 13.6 percent announced in April. Amid the whirlpool of speculation, the euro and European stocks were dragged down at the start of a crucial week which also sees Portugal, another beleaguered eurozone member, announce its budget. However, the yield or interest which Ireland would have to pay if it wanted to borrow, which it does not need to do until the middle of next year, eased slightly at mid-day, having edged up in the morning, to 7.893 percent for 10-year bonds. "Are markets right to be so troubled about Ireland's plight? With the problems of Greece far from over yet and given that the euro is increasingly being seen as a powder keg waiting to blow up, it seems to me that unless the fast growing heat can suddenly be doused the answer to that question can only be yes," said Howard Wheeldon of the brokers BGC Partners.

Speculation has reached fever pitch in recent days over a possible rescue for Ireland running to about 70 billion euros (95.8 billion dollars), with Irish government bond yields shooting through the roof over the past week. Ireland is in deep trouble mainly because of the costs to its finances of dealing with a huge crisis in its banking system, which in turn was the result of massive over-exposure to lending to property markets. The Irish public deficit this year is set to be slightly more than 30 percent of gross domestic product, 10 times the EU limit and more than three times even the Greek deficit. A finance ministry spokesman said Ireland had made no application for an external bailout but acknowledged that talks were up and running. "Ongoing contacts continue at official level with international colleagues in light of current market conditions," the spokesman said.

The pattern resembles the build-up in the spring to a 110-billion-euro EU-International Monetary Fund bailout of Greece when the cost of borrowing went through the roof as money markets lost confidence in Athens' ability to pay its debts. Some of the strongest resistance to bailing out Greece came from German Chancellor Angela Merkel who appears reluctant to help Ireland. Speaking at last week's G20, Merkel said: "We cannot explain to our voters and citizens why taxpayers must finance certain risks, and not those who made a great deal of money taking those risks." An EU source said on Monday that the organisation was ready step in but Ireland had no need for help as of now. "We are ready to go as far as the maximum option, if needed," he told AFP. "Ireland has not asked for it (help) and its requirements for financing are well covered until the middle of 2011." Amadeu Altafaj Tardio, a European Commission spokesman, also insisted there was no talks of a bailout. "Yes, we are in close contact with the Irish authorities. Yes, there are concerns in the euro area about the financial stability of the euro area as a whole," he told reporters. "But to say that there are strong pressures to push Ireland to any kind of (bailout) scheme of this kind, I think yes, this is an exaggeration." Greek Prime Minister George Papandreou, who has launched deep austerity measures and reforms, said over the weekend a delay in bailout repayments may be necessary as the deeper scale of his country's problems becomes clear.


         
Print - Comment - Send to a Friend - More from this Author

Comments(0)
Get it off your chest
Name:
Comment:
 (comments policy)

© Copyright CHAMELEON PROJECT Tmi 2005-2008  -  Sitemap  -  Add to favourites  -  Link to Ovi
Privacy Policy  -  Contact  -  RSS Feeds  -  Search  -  Submissions  -  Subscribe  -  About Ovi