Deposit rates & why they spell trouble for Irish Banks

There are now four Irish banks paying over 4% for certain deposit products. This is a good rate that outstrips current inflation. But it also spells trouble because banks are built of assets (loans) and liabilities (deposits, bonds, shares).

If they are paying their creditors 4% then they need to make more than that elsewhere to recoup the cost. The issue being that this is not happening. Much of what was taken away from the bank balance sheets to date are commercial property loans. Residential loans are the biggest asset left, and they are not making on average more than 4%.

This is a liquidity exercise and a capital raising exercise. In the past we used to complain about Anglo, and the way that a state bank shouldn’t be paying higher rates than other competitors in the market because it is a direct transfer from taxpayers to savers – that is a mistake.

But it is happening again, and it screams ‘desperation’, our banks are willing to pay twice the rate of some foreign operators in order to attract funds. …

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Best Deposit rates in Ireland March 2011

The best deposit rates presently available in Ireland are as follows:

Best Demand Account:     Ulsterbank Special Interest Deposit 4%* Best 1 month deposit:      NIB eSaver 3% Best 3 month deposit:      PTsb 3mth Fixed 2.5% Best 6 month deposit:      PTsb Interest First 3.25% Best 12 month deposit:    Nationwide UK (Irl) 3.65%

We can find the best options for you on other terms or go through the various deposit choices available if you want help navigating the market call us on 01 679 0990

*To a maximum of €15,000

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Irish banks, caught in the perfect funding storm

Irish banks are caught in a perfect storm of funding costs versus lending costs which spells bad value for consumers. This is clearly seen on the deposit and lending fronts, our banks can’t offer headline rates on deposits, nor can they charge sufficiently on lending. This is creating a multi-billion Euro dilemma which will ultimately be paid for by an already unfairly burdened taxpayer.

On the deposit side foreign banks can afford to pay far more than Irish institutions meaning they can hoover up deposits rapidly and with relative ease, on the lending side, Irish banks are unable to obtain the margin they need in order to compete and remain profitable.

When it comes to leading rates for indigenous lenders you will see that Anglo, despite being nationalised and having the inherent backing of the state on all deposits, is paying the highest rates for an Irish institution on  6 month (it is the best of the Irish institutions) and 1yr deposits (it is the best across the board on 1yr deposits) – this is well above the odds they …

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The day I mis-sold an insurance policy

About five years ago I had a couple in with me who were buying a home, I was helping them to determine their insurance needs and I realised that they had literally no protection if either of them ever fell seriously ill – not via their job/employer schemes or individually. So I suggested that they consider some serious illness cover, it would have cost them about €20 a month but they were insistent that they only wanted what was ‘cheapest and nothing more’.

As an adviser, it isn’t my job to always accept what people say they want because often, with adequate probing and understanding they actually want something entirely different, a skewed but simple way of understanding what I mean is that when saving or investing the majority of people want ‘high growth and high security’ – when in fact, these two features are normally night and day, if there ever was an asset that could deliver high growth with deposit account style security then everybody would pile in and the market would adjust accordingly, therefore you need to …

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Best deposit rates in Ireland November 2009

The lenders offering the best deposit rates are listed below with the highest in each category being the one we have shown.

Best demand account: INBS 3.75% (up to €20,000), Halifax 3.75% (up to €10,000), Anglo Premium Demand 3.1% – no restrictions

Best 7 day notice: Anglo 7 Day Notice 1.6%

Best 1 Month/30 Day: PTsb 30 Day Notice 3.25% (min. €10,000)

Best 3 Month: Ptsb 90 Day Fixed 3.25% & Investec 3 Month Fixed 3.25% (min. €20,000)

Best 6 Month: Investec 3.25%

Best 9 Month: Investec 3.5%

Best 1 Year Fixed : Anglo 3.6%

If you want to consider your deposit options you can contact us on 01 679 0990, we don’t have deposit agencies with every lender listed in the top position, so in some cases we’ll have to send you direct but in any case we can still help you choose the best deal on the market. All rates are up to date as 9th November 09′ and are subject to change.

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Ulsterbank & First Active won’t be passing the rate cut

The Ulsterbank Group (which incorporates First Active) have announced they will not be passing on the latest ECB rate cut to their variable rate customers. They did this with savers rather than borrowers in mind. As readers of this blog will know, I am no fan of either of these lenders as they have tended to offer the least value in the market, that, along with their service of the intermediary channel also puts them in the bottom slot as far as the intermediary industry is concerned.

So a move where they ‘don’t pass on the rate cut’ would seem to be the final nail in the coffin right? Well, not exactly. They are doing so to protect depositors, and it is important that people understand why a bank might do this, and why indeed, its is actually the right thing to do in the present market.

In plain English, the answer is this – the lower rates …

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Ulsterbank & First Active won't be passing the rate cut

The Ulsterbank Group (which incorporates First Active) have announced they will not be passing on the latest ECB rate cut to their variable rate customers. They did this with savers rather than borrowers in mind. As readers of this blog will know, I am no fan of either of these lenders as they have tended to offer the least value in the market, that, along with their service of the intermediary channel also puts them in the bottom slot as far as the intermediary industry is concerned.

So a move where they ‘don’t pass on the rate cut’ would seem to be the final nail in the coffin right? Well, not exactly. They are doing so to protect depositors, and it is important that people understand why a bank might do this, and why indeed, its is actually the right thing to do in the present market.

In plain English, the answer is this – the lower rates …

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GO TO JAIL! Do not pass go, do not collect €200 million

The talk of ‘Economic Treason’ and calling for the heads of every banker are sadly starting to gain more and more traction, all of this is happening without concrete evidence thus far of exactly ‘who’ we are chasing and ‘for what’ specifically, largely the financial leaders greed is central to accusations of wrongdoing, and while greed may not be morally acceptable to right thinking individuals it is not actually a crime.

The FT recently had an article showing that executive pay misguided but that it didn’t make them criminal by nature, stupidity is an ‘equal opportuntities’ trait. It is important that every person in finance is not villified for what was something that all of society played a part in.

One question nobody is asking is ‘what part did I play in this?’, as a brokerage we are culpable, as a consumer I am personally culpable and as a citizen I will be paying for mistakes made on both …

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