Over two million of us including Post Office customers, whose accounts are provided by the Bank of Ireland have cash in Irish banks. So how safe is it?
The good news is that the vast majority of deposits in Irish banks are covered by guarantees of one kind or another. If you have money in a 100% Irish-operated bank, such as Anglo Irish, you are covered by the Irish Deposit Guarantee Scheme (DGS), up to €100,000 per person, per institution.
And until June next year most accounts are also still covered by the Irish government's Eligible Liabilities Guarantee (ELG). This protects 100% of deposits (provided the guarantee is honoured). After June 2011 the new European-wide limit of €100,000 will apply. Note that Allied Irish Bank operates a UK-authorised subsidiary. Deposits there are also covered by the UK Financial Services Compensation Scheme up to £50,000 per person (so that's £100,000 for a joint account).
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What about Post Office products that have been supplied by the Bank of Ireland? On 1 November, the Bank of Ireland moved Post Office customers to its brand-new Bank of Ireland UK subsidiary. So now the first £50,000 of deposits (note that separate Bank of Ireland and Post Office accounts are lumped together) are covered per person under the Financial Services Compensation Scheme (FSCS) rules. From 1 January 2011 this rises to €100,000 under the new European rules. But cash deposits and fixed-term accounts (provided it was opened after 11 January this year) are also covered by the ELG.
So the overall message is simple don't panic. There's little point in rushing to withdraw money that is protected. But there is no time like the present to double-check the location of any money you may have in Ireland.
Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings and credit cards to pensions, property and pet insurance.
Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.
Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping among many other titles both online and offline.
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