Thursday 23 November 2017

So, what will Thursday mean for me and my money?

Thomas Molloy

Thomas Molloy

Q: So what happens on Thursday?

A: Not much if you're an ordinary punter to be honest.

Q: Should I be worried?

A: It all depends on the complexity of your financial affairs. Money held in Irish bank or credit union accounts is still "guaranteed" for the first €100,000, just as it has been for the past two years.

Q: Which banks are covered?

A: AIB, Anglo Irish, Bank of Ireland, EBS, ICS Building Society, Irish Life and Permanent and Irish Nationwide Building Society.

Q: I've just sold a house and have more than €100,000 in the current account. What happens if it all goes wrong?

A: In theory, the rest is protected by the Eligible Liabilities Guarantee Scheme (ELG Scheme) until the end of December. In other words, it is safe for another three months.

Q: What does the ELG cover?

A: Basically all retail deposits, demand deposits including current accounts and term deposits accounts of up to five years as long as the deposit was made before the end of the year and after the guarantee came in.

Q: What if I have a term deposit for a couple of hundred thousand which was agreed more than two years ago?

A: Well, then you have a reason to be a little concerned because the Government's guarantee only extends to the first €100,000. On Friday that money is no longer guaranteed.

Q: That seems a little strange.

A: Well you must remember that it is still unlikely that a bank will collapse and the Government here has to start bringing the situation here in line with other European countries.

Q: So this ELG scheme runs out in three months. Should I get ready to move my money?

A: Hard to say. The European Commission must approve the ELG every six months and the next approval would need to come before December 31. You should keep an eye on things.

Q: Why is the commission getting involved?

A: There are 17 schemes across Europe from various governments trying to prop up their banks. This creates unfair competition and that's something Europe doesn't like much. This is an attempt to level that famous old playing field.

Q: What does this all mean if you're a Anglo investor -- or bondholder -- and owed money by an Irish bank?

A: Finance Minister Brian Lenihan is being very coy but it will be bad news for Anglo bondholders who hold subordinated, or junior, debt. This means they are the last group to be paid in the case of any shortfall in the bank's assets. The group holds €2.4bn of debt, which was covered by the banking guarantee that expires on Thursday. The Government appears to be getting ready to do a deal with these people and could offer them as little as 20c in the euro.

Irish Independent

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