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What to do as RABO’s Exit Leaves Irish Depositors Marooned with Lower Grade Banks

By February 21, 2018Blog

Rabo Direct just announced that it is exiting Ireland May 16th next, leaving Irish retail investors with a choice of banks with inferior credit rating

The Dutch community owned bank provided Irish depositors with a high investment grade credit rating, Fitch AA – a notch below AAA, and the protection of the Dutch depositor guarantee scheme, backed by a Government whose bonds and finances are on a sounder footing than Ireland’s.  Dutch Government debt to GDP is roughly half of Ireland’s so in the event of a recycling of the global financial crisis, it is technically more secure.

If you want a reminder as to why this matters, remember Cyprus where global plans to haircut deposits rather than bail out banks with taxpayers money, was first experimented by the EU.  These are the new rules of the game now embedded in international agreements overseen by central bankers; when banks run into future financial crisis, bond holders and depositors can expect to be burned and Government Depositor Guarantee limits are discretionary in times of extreme crises as the Cypriots learnt in the early days of their blowout.

Deposits available in Ireland from Irish banks come with higher default risk, that is a fact, AIB, Bank of Ireland and Ulster Bank are several notches below the high quality long term credit rating of Rabo, a few others border non-investment grade and some deposit takers have no credit rating at all, relying on third parties.  The underlying question really is if the Global Financial Crisis (GFC) is over and many writers, this one included, believe that the bubble created by excessive debt has simply moved elsewhere, that the structural problem of excessive debt has been temporarily frozen in a fog of freezing interest rates.  This is now thawing.

Why the global financial system remains at risk isn’t something you’ll read about every day, but it is the truth, credit ratings matter.  There is too much debt, up 50% since the global financial crisis and not enough economic growth, up a third, to sustain it when the interest rate cycle reverses out of its historic trough.  That is now beginning, starting in the USA with the FED in order to battle rising inflationary pressures.  This is the Central Bank trap that I deal with in The Pivot (released before Christmas and exclusively available from the Jack and Jill Children’s Foundation on its website for €20).

I’ve been recommending Rabo Direct accounts as a fallback safety plan for clients for years and use the bank myself.  The Rabo exit is deeply disappointing but not unexpected as margins on deposit taking at a time of crushed interest rates are wallpaper thin and the Irish Government imposes a levy on all banks trading here.

This exit is unwelcome and leaves fallback plans marooned from May 2018, just three months away, so if you’ve a Rabo deposit account and you want to learn more about having a Plan B ready and what I’m doing myself and with clients, I’d urge you to order a copy of The Pivot from Jack and Jill or send me an email to

Hobbs Financial Practice Limited is just a click away, if you’d like to talk to Eddie about future-proofing your balance sheet, how to reposition financial assets like investment funds and pensions, email  Nothing is too big or too small, we reply to all enquiries, just pop us an email and we will take it from there.






Eddie Hobbs, 21st February,2018

Unit W9A1, Ladytown Business Park,

Newhall, Naas, Co. Kildare, W91 T211.

Tel: +353 45 409364

Fax: +353 45 409196