I've been collecting my pennies like the good boy I am and have some cash to put in a bank for a while. I've seen that kaupthing and the other (is it Giltnir?) offer better rates than the Finnish banks. I've also heard that the Finnish state guarantees the first 25000 put in any bank in Finland. So what risk can there be in investing?
If the bank tanks I get my money back, don't I? Also, would the Finnish banking authority allow a bank to operate a risky strategy and risk a 'Northern Rock' bank run?
Do icelandic banking rules apply in FInland? Does the Icelandic bank guarantee my money? Why aren't more people putting their wonga in these banks?
So many questions but cheers for your help.
icelandic banks
Re: icelandic banks
The deposit guarantee scheme is based on the bank's home country. This means that the Icelandic operators here in Finland fall under the Icelandic deposit guarantee scheme, which guarantees up to about EUR 20,000 (not as high as the EUR 25,000 here in Finland). Also, the main responsibilty for supervising the bank is in Iceland, but I've understood that the Finnish Authorities do keep an eye on the liquidity of foreign banks.
Therefore, if you're investing less than EUR 20,000, it should be okay in the case of financial difficulties for the bank. I imagine the only risk could possibly be that it might take a while to get your funds back if the bank did go bankrupt.
Ithink the recent reporting on Icelandic banks in some of the press has been a bit sensationalist. I recently watched Kaupthings first quarter profit broadcast on the Internet and they seem to be in good shape. They stated that in the event of a worst case scenario, they have enough liquidity to run for 440 days, so it would always be easy to withdraw money well before any financial difficulties for the bank.
Some are concerned about Icelandic banks simply because they have grown so big internationally and Iceland is so small. Some therefore question how well the Icelandic state could 'save' the banks if there was a financial crisis. However, Kaupthing and Glitnir have good ratings from Moodys and Fitch, so again it would be possible to spot problems on the horizon if the big rating agencies suddenly started downgrading the banks.
The reason they are offering attractive savings rates is to try and boost their deposits. The icelandic banks have raised more money on the markets than the average banks instead of through deposits, so some felt that this could be risky if the funding dried up. In traditional banks, a fair amount of their funding is from customer deposits, which usually don't all get withdrawn (unless there's a bank run!). Kaupthing said on the Internet that they're aiming to get customer deposits up to 50% of funding in 2008.
I think that the Icelandic banks have been successful in getting new customers, although there are people who won't invest because of the stories they've read. I also think that there's been a bit of negative press here in Scandinavia because it's always fun to gossip and speculate about the neighbours
I personally don't think there's any great risk investing in Icelandic banks and the interest is certainly better than the paltry amounts offered by some Finnish banks for instant access. You could probably get a bit over 4% from a Finnish bank, but that would be for, say, a 3 month term deposit.
Therefore, if you're investing less than EUR 20,000, it should be okay in the case of financial difficulties for the bank. I imagine the only risk could possibly be that it might take a while to get your funds back if the bank did go bankrupt.
Ithink the recent reporting on Icelandic banks in some of the press has been a bit sensationalist. I recently watched Kaupthings first quarter profit broadcast on the Internet and they seem to be in good shape. They stated that in the event of a worst case scenario, they have enough liquidity to run for 440 days, so it would always be easy to withdraw money well before any financial difficulties for the bank.
Some are concerned about Icelandic banks simply because they have grown so big internationally and Iceland is so small. Some therefore question how well the Icelandic state could 'save' the banks if there was a financial crisis. However, Kaupthing and Glitnir have good ratings from Moodys and Fitch, so again it would be possible to spot problems on the horizon if the big rating agencies suddenly started downgrading the banks.
The reason they are offering attractive savings rates is to try and boost their deposits. The icelandic banks have raised more money on the markets than the average banks instead of through deposits, so some felt that this could be risky if the funding dried up. In traditional banks, a fair amount of their funding is from customer deposits, which usually don't all get withdrawn (unless there's a bank run!). Kaupthing said on the Internet that they're aiming to get customer deposits up to 50% of funding in 2008.
I think that the Icelandic banks have been successful in getting new customers, although there are people who won't invest because of the stories they've read. I also think that there's been a bit of negative press here in Scandinavia because it's always fun to gossip and speculate about the neighbours
I personally don't think there's any great risk investing in Icelandic banks and the interest is certainly better than the paltry amounts offered by some Finnish banks for instant access. You could probably get a bit over 4% from a Finnish bank, but that would be for, say, a 3 month term deposit.Re: icelandic banks
Thanks for the information. I am continually amazed at how people take the time and have the patience to respond with such thoroughness to a complete stranger.