Should I transfer my Euros from Spain to Germany

Would it be wise to transfer my 100k euro's from a Spanish Bank in Spain to a safer German Bank in Germany. There is no cost to do this I am told.

I know a lot of people say Spain banks are safe. But what would happen if there was a big run on all the banks, like happened to Northern Rock & RBS.

Personally I only keep sufficient money in Spain to cover expenses.

If the eurozone countries manage to navigate their way through the ongoing crisis and Spain remains in the Euro your money should be safe enough but if it doesn't it will convert to pesetas or whatever currency Spain ends up with. If you are concerned about this risk you'd be better off moving it to Germany

Another consideration is that up to €100,000 deposited in a Spanish bank is guaranteed by the Government similar to the scheme in the U.K. Be aware that this only applies to deposits and not to Bonds with the bank.

As it is all guesswork all advice is like sticking your finger in the air!  A consideration is that IF Spain were to leave the Euro then will the new currency be at a discount as Spain would obviously devalue. Now if the money was in Euro in Spain would you get the advantage of the devaluation or not? Certainly those in Sterling would get the advantage of the devaluation on an instant and ongoing basis.

The primary question however is why have you got €100,000 sitting, obviously doing nothing, in a Spanish bank? If it is for "immediate use" then that might be acceptable otherwise find a more suitable 'investment' for your money

Another consideration is that up to €100,000 deposited in a Spanish bank is guaranteed by the Government

That's great whilst Spain is viable.  

Bt like the Irish Allied Bank I o M.  They have protection up to reasonable level,  BUT the fund is capped. So if the total claims were greater than the fund,   depositers would only get a share of the fund  (I confirmed this with the bank).

I personally don't have a great deal of confidence that Spain will weather the storm, hence I do not have money above immediate needs, here.

A lot of the Brits that we know have sent their money back to the UK and set up standing orders to transfer living expences. Although the recent problem with nat wes has caused some problems. I'm not suggesting that this will happen regularly but it's well worth keeping in mind.

Hi Steone

The primary question however is why have you got €100,000 sitting, obviously doing nothing, in a Spanish bank? If it is for "immediate use" then that might be acceptable otherwise find a more suitable 'investment' for your money

Not trying to be funny. I got the money from a house sale. But where else invest it. Portugal, Greece, Ireland, Iceland, maybe even Burma now. I have been told by a top London adviser Australia is one of the safest places. He says LM Australia pay 7%pa for 2 year depost and 9%pa for 5 year deposit. Rate is not guaranteed, nor is capital, but has 11 year track record world wde web ifagroup dot org Best deal I can get at Llloyds TSB Offshore is 2.5%pa net 2 year, that's going to be less than inflation.

Any idea's.

Another consideration is that up to €100,000 deposited in a Spanish bank is guaranteed by the Government similar to the scheme in the U.K. Be aware that this only applies to deposits and not to Bonds with the bank.

This so-called guarantee is worthless.  The Spanish government would not be able to honour this guarantee.  Where would it get the money from?  There is no pot of money sitting there ready should a bank collapse.  Spain would have to borrow the money at crazy interest rates.

Hi Steone

The primary question however is why have you got €100,000 sitting, obviously doing nothing, in a Spanish bank? If it is for "immediate use" then that might be acceptable otherwise find a more suitable 'investment' for your money

Not trying to be funny. I got the money from a house sale. But where else invest it. Portugal, Greece, Ireland, Iceland, maybe even Burma now. I have been told by a top London adviser Australia is one of the safest places. He says LM Australia pay 7%pa for 2 year depost and 9%pa for 5 year deposit. Rate is not guaranteed, nor is capital, but has 11 year track record world wde web ifagroup dot org Best deal I can get at Llloyds TSB Offshore is 2.5%pa net 2 year, that's going to be less than inflation.

Any idea's.

Yeah, because you'd really get great advice here wouldn't you!!  The mind boggles!!  If you have a 'top London adviser' on board, why on earth are you asking for advice here???????

I agree with Sanchez1 Spain bank guarantee is worthless. Get your money out now and a long way from corrupt Spain and its banks.

As for Pitby comment., People are entitled to ask for second opinions, that is part of the purpose of this forum. If you have nothing constructive to say, why not go back to your crayoning book

 It has to get personal doesn't it!  As I said, the mind boggles.

prospain

For the obvious reasons I nor anybody else on here should give you full total investment advice. However there are many things you need to consider before making any investment. Amongst them are your ages, when you might need the money, your risk profile, your tax situation, if you need guarantees or are prepared to take some risk yourself etc. etc. etc. If you decide to invest in a currency other than Euro or Sterling then you have to add in, to the likely returns, the currency fluctuations. These can more than wipe out any gain you might have made with the 'higher' interest rate or make them even better!  Another interesting point that I have deduced form your postings is that you are only looking at deposits directly with a bank. For medium term (3 to 5 years) and longer these 'investments' generally return less than the rate of inflation, after tax, so therefore you will be losing money the longer you keep it there. You need advice from a fully qualified INDEPENDENT adviser and not one who only sells his/her own companies products, especially a 'high street' bank. Another thing you need to look at is not what the headline rate of return is but what the after tax return you personally will get. There are products around that can give you a 75% tax free amount on your 'gain'. This means that, in Spain, you will only be taxed on 25% of the gain which greatly reduces the total tax paid. Some of these investments can be in low risk investments so therefore these are for the more cautious investor.

Another thing to consider is the adviser you choose. Don't be his biggest client and also don't be one of the smallest.

So many questions so few answers!!!!!!!

No this is what you said.Pitby

Yeah, because you'd really get great advice here wouldn't you!!  The mind boggles!!  If you have a 'top London adviser' on board, why on earth are you asking for advice here???????

So you think everyone on here is a dimwitt know nothing like you, and incapable of giving an opinion and advice. There are lots of people on here with great knowledge.

Yes Pitby lol. I think your gif on the right of your comments just about sums you up.

Thank you everybody for your advice. It is unfortunate that Pitby had to spoil the forum.

Spanish banks are more at risk than those in some other countries  That is why the Spanish Government is trying to negotiate a loan from other European copuntries for an amount that could be as large as €100bn.   it has not yet succeeded in doing thisand may face some difficulty.

Some Spanish banks have relatively high loan to deposit rates - as do some British banks.  The European Commission has required that all European banks reduce their ratio of loans to deposits to 120%.  That is to say that they could only lend 20% more than they have deposited in their branches by savers.  Many banks in several European countries are still well above this level.

There is a national agreement in most European countries that depositors will be protected up to the amount of £85,000 or €100,000 in the event of a bank failing.  This nearly happenned at Northern Rock where the loan to deposit rate became reckless. But the British Government has stepped in and protected savers.

The danger is that the Spanish Government itself could find that it had so little money in its coffers that it became unable to protect bank deposits. This was a real risk in Ireland when the government rashly promised to protect all deposits to an unlimited level. It is clearly a risk in any country where the banks and the governent are both over-borrowed.

Your first question should be - do you think that the € itself is in trouble,  if you do then a deposit in a British bank in £sterling or an US bank in US$ might be a better option than a German bank where the money would stil be in €s.

Many Greek depositors have moved their bank accounts to other countries in the belief that the € will cease to be Greek currency and that their bank accounts will overnight become worth less than before.  This is not talked about for Spain, as yet, but with such a large sum at stake, I would certainly diversify into other assets or other currencies, including other bank accounts.

If Spaniards and Italians in large numbers start  cash to safe havens such as Germany the ECB will have no option but to suspend Target2 (in essencewith Target2 the dosh stays in German banks  but the ECB sends replacement dosh to Spain, etc.) In other words the Spaniard gets to safeguard his money but the risk passes to mostly German taxpayers as they appearing to be guaranteeing Spanish banks.

Once Target2 is suspended, it´s game over. All Spannish banks collapse the same day as they literally would have no cash.

If you´re going to panic, be the first.

The risk is clearly that the number of banks in trouble across Europe will be too big for the European Central Bank to handle effectively. Or it may be too slow to react. The ten banks with the highest debt to deposit ratios are all in Europe.

Spain has very real problems of an enormous unsold housing stock, which was built on the basis of bank credit. The banks are now taking on these properties as unperforming debt and attempting to clear them. But there is a huge backlog, which will take years to reduce.  The state and communities likewise spent huge sums on urbanizacion infrastructure for the properties, again with borrowed money. This massive bubble has now burst.

In uncertain times it is common sens to diversify your portfolio of assets.

Moody`s the US ratings agency, which reports on the riskiness of all investment bonds, yesterday downgraded the credit ratings of all the large Spanish banks. Some are now no longer of investment grade, which means that pension funds cannot invest in them. Whilst this does not directly implicate the safety of deposits in a Spanish bank- their grading is for the bonds which the bank sells mainly to large investors- it does have an influence. It makes it more difficult for the bank to raise capital for its operations and therefore makes it less able to withstand a run on its deposits.

There is a plan that all European bank deposits should be guaranteed not by the national governments but by the European Central Bank,  This would reduce the risk of Spain not being able to guarantee the first €100,000 of deposits in a Spanish bank.  But this could take years to materialise. In the meantimne, you must rely on the Spanish Government, itself, not going broke. You can see from the history of Northern Rock just how quickly savers` confidence can evaporate. Diversify your risk..