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Tax Break In Irish Certificates Of Deposit Market To Draw Investors

by Jason Gorringe, Tax-News.com, London

11 November 2003


The Dublin market in Certificates of Deposits (CDs) is set to boom over the next couple of years as investors take advantage of the investment’s new DIRT-free status (Deposit Interest Retention Tax) introduced in the recent Finance Bill, according to a report in The Times.

“Over the past 18 months there has been a privately placed market in Dublin which is already around EUR1 billion to EUR1.5 billion,” Alex Pashley, a spokesman for Bank One’s depositary and clearing centre in London, told The Times. “We would expect that to grow at least tenfold, reaching at least EUR10 billion. We are hoping to have five new banks on board in about six months.”

“US banks and financial institutions are also interested in CDs from Irish banks. They can shift it much quicker than commercial paper and are thus willing to increase their exposure,” added Mr Pashley.

A CD is a relatively low-risk, fixed-term investment instrument issued by a bank or insurance firm, usually at higher rates than standard interest rates offered by savings accounts. They are attractive to institutional investors due to their liquidity and their ability to be sold on prior to maturity.

The Bank of Ireland, Ulster Bank and AIB are finalizing plans to enter the Dublin CD market, according to Pashley.


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