Referendum sees ‘more people move savings offshore to safer havens’
Friday, May 18, 2012
The referendum on the fiscal treaty has caused an increase in people moving their savings out of Ireland into perceived safer havens, according to a Cork financial adviser.
Sean Pierse of ABM Financial Advisers said that there had been a lull in people moving their money out of Ireland in Jan and Feb but since the announcement of the fiscal treaty he has been working night and day off-shoring people’s money.
"We are definitely seeing capital flight since the referendum was called. People want safety at the moment, not a return on their investment," he said.
"In an environment where there is no spending, savings should be shooting up, the banks should be overflowing with money. They are not so where is it all going? People like us are sending it overseas. Last year we had to work all the bank holidays and Sundays," he said.
To highlight the difficulty Irish banks are having in attracting deposits into their accounts, Mr Pierse highlighted the different deposit rates available in KBC bank’s Irish operation and the bank’s Belgium branches.
KBC Ireland offer a deposit rate of 3.25% but their Belgium branches only offer a 1% rate. Mr Pierse said the 1% rate is more realistic as it is closer to the European Central Bank rate.
A spokesperson for KBC said "The dynamics in the Irish and Belgium retail savings markets are very different. KBC Ireland is committed to growing its retail business in Ireland and therefore is offering competitive products providing choice to Irish consumers.
"While pricing for retail deposits in Ireland remain high compared with international rates, our offerings are in line with the market. By way of comparison the personal deposit market in Belgium is over €630bn compared to circa €80bn in Ireland."
Mr Pierse said that after the Queen’s visit to Ireland, sterling had been a very popular destination for people looking for a safe haven for their money.
Mr Pierse said that anyone placing money in a single currency was exposing themselves to the whims of the currency markets.
He recommended a basket of currencies and bonds to try and eliminate risk from the unfolding euro crisis.
German bonds are very popular, he said. Although they provide a low rate of return they are seen as being very safe.