Irish banks: are your savings protected?

Ireland faces intense European pressure ahead of crunch talks with ministers today to accept a massive financial bail-out as its deficit runs at 32% of its national wealth (see the Safe Savings guide).

MoneySavingExpert.com users have emailed us raising concerns about the safety of the savings.

Below, we round up the protection in place for those with savings in the UK arms of the three major Irish banks, which includes the Post Office whose financial services arm is run by Bank of Ireland (BoI).

Post Office/Bank of Ireland UK

Here, there are two tiers of protection:

• Savers are protected by the UK's Financial Services Compensation Scheme (FSCS) for first £50,000 per person deposited. This follows the formation of a UK arm of BoI on 1 November. Before that, savers were wholly reliant on the Irish government's Deposit Guarantee Scheme (DGS). From 2011, the FSCS limit will rise to £85,000.

• Above £50,000 (or £85,000 in January) savers are protected in full until 30 June 2011 by the Irish government's Eligible Liabilities Scheme (ELS). If the account is for a fixed term, the ELS guarantee only applies if it was opened from 11 January 2010 (when BoI joined the ELS). The protection for fixed term deposits lasts until account maturity.

This protection applies to BoI savers in Northern Ireland, as well as the Post Office's savings products (which are different to the NS&I products it sells that are 100% protected by the UK government).

It means savers have more protection than many of their counterparts in UK banks, though concerns have been raised as to whether the Irish government's scheme could handle all claims.

Allied Irish UK

Again, there is a similar two-tier system.

• Savers are protected up to £50,000 per person by the FSCS (rising to £85,000 in 2011).

• Above those sums, savings are guaranteed in full by the ELS until 30 June, or until a fixed term account matures. For fixed deals, only those opened from 21 January 2010 (when Allied Irish joined the ELS scheme) are protected by the ELS.

Anglo Irish

Again, there is a two-tier system, but with a difference.

• The bank does not have any UK protection so savers are wholly reliant, initially, on the Irish government's DGS, which protects deposits up to €100,000 per person.

• After that, the ELS protects all deposits until 30 June, or until a fixed term account matures. For fixed deals, they are only protected if opened from 28 January 2010 (when Anglo Irish joined the ELS scheme).

Our view

Martin Lewis, MoneySavingExpert.com creator, says: "Though it's likely the Irish government will support its banks and the EU will support the Irish government, if necessary, savers can't be blamed for questioning how they're protected.

"Irish banks setting up in the UK are, like other EU banks, allowed to opt out of UK protection and for the Irish guarantee. What's crucial is people know whether their bank has UK or Irish protection. "While nothing's certain, I'd suggest the safest position is to pick a bank with full UK protection. If it fails, a government you elect is responsible for your protection, rather than an overseas administration, even if that government is promising to protect larger amounts."Even for those with savings in a UK-protected institution it's worth remembering that above £50,000 your money isn't guaranteed, and while no-one with cash in a UK-protected account has lost out since the start of the credit crunch, it is always a possibility. So spreading savings above that amount is sensible."

Further reading/Key links

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