Irish banks report deposit surge as protection limit is raised

Apparently Irish Banks have reported a surge in savers depositing their money with them yesterday after the weekend move by the Irish Government to increase the amount covered by the deposit protection scheme to €100,000 per depositor.

Savers with Irish banks like Anglo Irish and Bank of Ireland will now enjoy the highest levels of protection in the EU, with the first €100,000 of their savings protected.

This is a clever move on the part of the Irish and I wonder if the smart money will now start to fly across the Irish sea!

How does this work then?

Does the Irish Government guarantee all of the €100,000?

Does it apply to UK savers with money in Irish banks?

What about the Post Office?

I read that they use the Bank of Ireland's banking licence, so does this mean savers with the Post Office now enjoy €100,000 protection?

The Irish Government increased the statutory limit for the deposit guarantee scheme from €20,000 to €100,000. So if you have savings with Anglo Irish and Bank of Ireland you'll now see your savings protected to 100% of the first €100,000 per depositor per institution, which is the highest level of protection in the EU.

UK savers with savings in Anglo Irish or Bank of Ireland will be covered by the UK Financial Services Compensation Scheme for up to the first £35,000, but will now enjoy enhanced protection of approximately £78,700 in total through the Irish Deposit Protection Scheme. This means that if you have savings with Anglo Irish or Bank of Ireland you have an extra £43,700 worth of protection.

The important point to note is that deposits with credit institutions authorised in another European Economic Area country and operating in the UK on a branch basis are covered under the home country’s depositor protection scheme.  

The Post Office operates under Bank of Ireland’s banking licence and your savings are covered up to €100,000.

Savers with Allied Irish Bank (GB) also need to be aware that they are saving with a UK bank and are only protected up to the UK limit of £35,000.

Read my latest blog for more information - Anglo Irish – earn 7% with the first €100,000 protected

The Irish Government agreed yesterday to guarantee all deposits and debts at Allied Irish, Anglo Irish, Bank of Ireland, Educational BS, Irish Life and Permanent and Irish Nationwide BS. This guarantee is effective immediately and ends in September 2010.

According to the Financial Times, it covers €400bn of liabilities, including retail, commercial and inter-bank deposits, plus covered bonds, senior debt and dated subordinated debt. This guarantee will be paid for by a levy on the banks concerned.

I see that the French have criticised this move by the Irish:

http://news.bbc.co.uk/1/hi/business/7648027.stm

The French are concerned that this gives Irish banks an unfair advantage over foreign competitors because it makes them more attractive to nervous investors. There have been reports of people in the UK switching their funds from British banks to Irish institutions. The French want to set up a Europe-wide banking rescue fund.

I've heard that the Post Office has experienced a significant increase in savings deposits, due to the fact that it's now probably one of the safest places in the EU for your savings.