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Extra Protection for Your Money

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Extra Protection for Your Money

Northern Rock, Lehman Brothers, Wachovia, Fortis, Bradford & Bingley ... the list of the world’s faltering banks is long and at the moment, shows no sign of ending. At a time when the global recession would have us believe that our savings held by banks are perhaps not as safe as we thought, those with money in Irish banks have recently received some extremely good news.

The Irish government has recently announced that it is increasing the guarantee level on deposits held in Irish banks from €20,000 to €100,000. This very welcome move, designed to reassure savers in Ireland that their money is safe, means that money deposited in an Irish credit institution is not at risk. The €100,000 deposit limit covers money in savings and current accounts in any of the 6 Irish banks (Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Irish Nationwide Building Society and the Educational Building Society) and government-approved subsidiaries.

This timely measure, which came into effect on 30 September 2008 and is valid until 28 September 2010, provides a vote of confidence for the Irish banking system. According to the Anglo Irish bank, the Irish government’s objective in taking this action is to maintain financial stability and “is in the best interests of the Irish economy”.

The new guarantee level in Ireland is now one of the highest in the EU and is expected to put pressure on other governments to follow suit and also raise their limits on deposit schemes. The British government has recently increased the amount covered under its Financial Services Compensation Scheme (FSCS) from ₤35,000 to ₤50,000. Many experts consider this amount to be too low, particularly for savers who have a spread of savings in various banks, which may be owned by a larger banking institution. Under the terms of the FSCS, banks who operate under the same banking license are considered one company and savers therefore only qualify for the maximum of ₤50,000.

The recent increase to the compensation scheme approved by the British government is a welcome increase but still considerably short of the Irish equivalent. “The Irish move is excellent news for savers during these difficult economic times,” comments Ken Thorkildsen, Director of Obelisk Private Finance, “and similar measures are definitely required in other countries to safeguard people’s money. In the meanwhile, I would recommend that if you have large savings, you deposit them in different banks to maximise your protection.”
 
 

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