PERSONAL FINANCE: Your queries answered
Q
I have been reading with interest about the ongoing Anglo Irish Bank situation. My wife and I have savings in Anglo and are obviously concerned about the winding-up situation.
Could you explain what happens to saving deposits such as ours if the bank does wind up?
I feel that a lot of people like us are not familiar with this type of situation and clear information is difficult to get. Can you run through in detail what we can expect?
– Mr DJ, Wales
A
There has been a lot of activity in relation to Anglo Irish Bank in recent weeks – largely because of money market nerves over the eventual cost of its bailout.
You are right that the Government has decided this now nationalised bank will eventually be wound down.
It proposes doing this by way of splitting the bank into two entities – an asset recovery arm effectively managing its loan portfolio, and a funding business that will contain about €56 billion in customer deposits.
The plan is dependent on approval from the European Commission and this is by no means certain.
Last week, the Minister for Finance, Brian Lenihan, extended the guarantee in relation to Anglo Irish Bank and stated that, among other things, this meant all deposits were fully protected until the end of this year.
Separately, announcing the plan to split the bank, he said the proposal would not adversely affect depositors.
In any case, regardless of any wind-down, the first €100,000 of deposits held by a person in any Irish-owned bank is covered under the Deposit Protection Scheme. This means that even if the bank collapsed, you would get your savings returned up to that €100,000 limit. If you have more than that, it might be prudent in the current volatile market to spread your savings among a number of financial institutions, notwithstanding the Minister’s extension of the State guarantee to all Anglo deposits – for the rest of this year, anyway.
No change in value of Smurfit Stone shares
Q
Last week, you said that people were better off than they had thought if they held shares in Smurfit Stone Container Corp. Is that really the case or has the company just grouped shares together?
– Mr SS, Dublin
A
You’re quite right. A reader had been concerned that our share price listings were citing Smurfit Stone Container Corp (SSCC) shares at around 21 US cent when websites were showing them trading at around $18.
The price has indeed jumped to $18-plus in recent weeks – but only because Smurfit Stone has consolidated its shares. The company went into Chapter 11 (the equivalent of examinership) in the US at the start of last year, emerging successfully from the process last July.
As part of the process, and following a battle by shareholders who risked losing their investment the company consolidated its shares. For every 10,000 old SSCC shares you held, you now have one share. Effectively, your holding is worth the same (slightly less in fact).
This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into.
