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    Question for financial types

    my mam and dad sold their house down in Tipperary and moved to Galway there about this time last year. The money is happily sitting in an AIB account.

    Normally this would be fine, as The Irish banks are generally very rich and profitable, however they were all very overenthusiastic when it came to lending in our property bubble. With the collapse of Lehmann brothers etc my mam has become distinctly nervous about the prospects of the AIB, and on looking into it, she would appear to be right.

    So basically what can my increasingly risk averse mother do with her cash. Are there any banks in particular (that you can access in Ireland) that seem to be relatively resillient. How would one go about buying government bonds if that was an appropriate action.

    #2
    Question for financial types

    Get them to talk to a financial advisor.

    Comment


      #3
      Question for financial types

      Good advice.

      I have no reason to believe that AIB is in worse shape than any other Irish bank.

      The financial advisor can answer the bond question. Several countries (including the US and Italy) provide facilities for residents to buy government bonds without going through a broker or paying commissions.

      An important data point will be the extent to which the Irish government guarantees retail banking deposits. If your parents' account is significantly larger than the current limit, they may want to consider splitting it into two or more smaller accounts (in different banks).

      Comment


        #4
        Question for financial types

        Pretty much what ursus said. All Irish banks are going to be under a bit of strain with the end of the housing boom, but I don't know which ones have been most overextended or have the most concentrated risk (there hasn't been much Irish securitisation outside of First Active, so it's not a country I've looked at much). Looking back through recentish issues of my newspaper, they don't seem to have had too much trouble raising capital, but that may change as property prices fall and liquidity gets tighter.

        Comment


          #5
          Question for financial types

          Take the money out the bank and stockpile cigarettes to sell on the black market when the world economy collapses.

          Comment


            #6
            Question for financial types

            Too perishable.

            Cans of beans. And some horses and carts to transport them about in (can't rely on being able to afford fuel in a couple of years, and in any case all the garages will have gone tits-up, so no-one will be able to maintain their cars on the road anyway).

            Comment


              #7
              Question for financial types

              Holland seems to be fairly well insulated from the property crisis, as there is a genuine shortage of houses here. Plus, Dutch banks (with an exception of ABN Amro's American branches) seem to have stuck to pretty stringent lending criteria. At one point, people with the same salary as me in Ireland could lend over twice as much for a house as I could in Holland.

              And the Dutch are notoriously stingy. The average Dutch person has over 10 thousand euros in a savings account, so Dutch banks are probably swimming in cash.

              So www.rabodirect.ie might be an option.

              But I know feck all about these things.

              Comment


                #8
                Question for financial types

                I interviewed Rabo's CFO a couple of weeks ago. He seemed very confident about the Dutch market in general and Rabobank in particular, but then they always do.

                Comment


                  #9
                  Question for financial types

                  4th safest bank in the world, according to Global Finance, whoever they are.

                  Comment


                    #10
                    Question for financial types

                    Rabo is AAA, and long has been - the only retail bank that has that. Must be a really dull bank.

                    Comment


                      #11
                      Question for financial types

                      I bet UBS doesn't finish that high in this year's survey.

                      LBBW is another surprising name on that list.

                      Comment


                        #12
                        Question for financial types

                        I thought all banks were dull.

                        I'm with Rabobank, I never had a problem with them. Except for when they tried to charge me 40 euro in administration costs for cashing an Irish cheque. When I told them that it would be cheaper to fly to Ireland with Ryanair and pick up the money myself, they relented.

                        Comment


                          #13
                          Question for financial types

                          and so is my mammy. I suggested to her that she try it on the basis of that AAA rating, and that is what the financial advisor also suggested. So we went over to the ACC (the Irish subsidiary of Rabobank) and went in and my mam, demanded to see the manager.

                          I was almost disgusted to see how a bank manager behaves when someone turns up with a chunk of cash to deposit. My cynical nature had lead me to expect something along these lines, but my oh my.

                          I've come to the conclusion that More banks should be mutuals. I wonder what proportion of banks near the top of that list are mutuals.

                          Comment


                            #14
                            Question for financial types

                            Rabobank is officially a credit union, I think. An extremely pimped credit union.

                            Comment


                              #15
                              Question for financial types

                              The other 4 banks in the top 5 all have (or had) an explicit or implicit state guarantee of their finances.

                              Comment


                                #16
                                Question for financial types

                                Hmmm... RTE news are openly talking about what would happen if an Irish bank collapsed.

                                Comment


                                  #17
                                  Question for financial types

                                  McWilliams has been saying that an Irish bank will collapse at some stage in this property crash. €20,000 is the maximum savings are insured to in Ireland. There is some confusion over what happens if you split up savings over that amount and more than one bank folds. Rabo Direct is the bank I've seen recommended most for Irish people worried about these things.

                                  Converting to pounds and putting it into Northern Rock is something which they might consider although that will probably have more transaction charges than any other method. Of course, if all people holding large amounts in Irish banks follow the advice of finding the safest one for their money then a collapsed bank becomes a self-fulfilling prophecy.

                                  Comment


                                    #18
                                    Question for financial types

                                    I'm also not sure that I would recommend taking a punt (heh) on sterling against the euro in the current environment, especially if one has to live in a euro-denominated economy.

                                    Comment


                                      #19
                                      Question for financial types

                                      Considering that most people in Ireland are seriously in debt, there'd probably be a huge party if AIB or BoI went tits up.

                                      Or do they not wipe your debt off as easily as they fuck off with any savings above 20k?

                                      Comment


                                        #20
                                        Question for financial types

                                        i owe the bank more than the bank owes me. if it collapses i'll just have to rebuild my life as best i can.

                                        Comment


                                          #21
                                          Question for financial types

                                          excuse my economic illiteracy, but i'm wondering what does happen in the event of a banking collapse. if an irish bank collapses, presumably other firms will move in to absorb its pathetic assets. these assets will include lots of the giant mortgage loans that became fashionable in ireland a short time ago, thanks in part to the wild speculative lending that has caused the bank to collapse.

                                          if these incoming firms can take over the loans at an enormous discount, why should the debtors be forced to pay off the loans on the original terms?

                                          like barack obama i turn to jesus for guidance.

                                          the master tells the only servant who has not increased his talents after a year that he should have put the money to the exchangers and earned the master his return through usury. the master casts the servant into outer darkness.

                                          a worker tells the master he will work the whole day for 10 shekels. then he notices that guys who only started work late in the afternoon are also getting 10 shekels. the master airily dismisses his complaints.

                                          the servant is excused a debt of 10 shekels by his master, then jails his subordinate over a debt of 1 shekel. the master throws the servant in jail.

                                          so: speculation is to be encouraged, contracts are to be respected, debt cancellation is at the discretion of the master.

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