Friday, October 03, 2008

The banks are not chastened

British people are flocking to Irish banks, thanks to the government's commitment the other night.
Tens of thousands of savers are seeking to transfer their cash out of the UK and into Irish banks – including the Post Office accounts run by Bank of Ireland – to gain the unlimited deposit protection recently afforded them by the Irish government. The first three days of this week have seen three times the normal level of new accounts and inquiries about Irish banks, according to price comparison website
This has Gordon Brown pretty miffed, apparently. From what the Financial Times reports this morning, our Irish banks are taking our taxpayer commitment and turning it into an unbeatable marketing ploy.
Ireland’s decision to prop up its six biggest lenders by guaranteeing all their debts and deposits was passed into law on Thursday, in the face of anger across Europe about the impact that it would have on the EU’s single market.

British bankers said there were already signs that some Irish lenders were approaching corporate and private banking customers in the United Kingdom and encouraging them to move their money.
You know, I doubt a single taxpayer, well other than those who run our banks and building socieities, thought we were doing anything other than rescuing those badly run institutions. But, no. We were actually emboldening them.
“We now represent the safest place to deposit money in Europe with a AAA guarantee from a country with the lowest national debt to GDP ratio of any AAA country,” wrote Michael Fingleton, Jr, an Irish Nationwide executive, in an e-mail to employees of a large investment bank.

An Irish Nationwide employee confirmed that it was offering UK customers 6.75 per cent interest for a six-month bond with a minimum investment of £20,000.
Sickening, isn't it?