A couple of people have asked about this. Obviously none of this constitutes advice, and in fact you’d be totally insane to do anything I suggest or endorse without checking the facts for yourself.

This is complicated stuff. And neither the Government nor the banks seems keen to reassure people that this probably wouldn’t be a disaster.

In fact there are (at least) two guarantee schemes in place. One pre-dates Sep 2008 and is intended primarily for depositors. The second scheme, introduced in 2008 and amended in 2010 is primarily intended to guarantee the liabilities of the banks (deposits, bonds and other debts). The confusion seems to come from the fact that they both cover ‘depositors’. For the overwhelming majority of private individuals at least, it seems that withdrawal of the guarantee introduced in 2008 covering all liabilities (deposits, bonds and other debts) will make no difference, since there is a pre-existing statutory guarantee for depositors.

Money Guide Ireland gives a pretty good summary of the situation regarding the guarantee(s) and how it affects depositors (click the link for the complete article):

For the majority of the general public with savings accounts the main points to note are these:

Retail deposits (On demand or fixed term) of up to €100,000 will continue to be covered under the Government’s deposit guarantee scheme which does not have an expiry date.

On-demand deposits of more than €100,000 are guaranteed until the end of June 2011 at AIB, Bank of Ireland , Irish Life & Permanent ,Anglo Irish Bank , Irish Nationwide and EBS

Fixed Term deposits of more than €100,000, which pay an interest rate for a set period of time, are covered to the end of the fixed term up to a maximum of five years. The fixed term deposit must have been started after the bank joined the ELG scheme and before June 2011 (Only at at AIB, Bank of Ireland , Irish Life & Permanent ,Anglo Irish Bank , Irish Nationwide and EBS)

So – the sensible thing to do if you have more than €100,000 on deposit with one of the Irish banks – is to either split it up into and spread it across other banks or move it into a fixed term deposit account with one of the “ELG” institutions before the end of June 2011.

As an aside, if you have more than 100k in any bank, you might consider seeing an IFA for the simple reason that its almost certainly the most unproductive place to keep that kind of money.

By the way, in case you think this might cause a run on the banks, take a look at this:

Central Bank Statistics – Money Supply: Irish Resident

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