diff --git a/lib/setup.php b/lib/setup.php
index 5f127b8862b..218b11fe67c 100644
--- a/lib/setup.php
+++ b/lib/setup.php
@@ -149,14 +149,9 @@ global $HTTPSPAGEREQUIRED;
         die;
     }
 
-    /// Set the client/server and connection to utf8 if necessary
-    if ($dbconnected && $CFG->unicodedb) {
-        if ($db->databaseType == 'mysql') {
-            $db->Execute("SET NAMES 'utf8'");
-        } else if ($db->databaseType == 'postgres7') {
-            $db->Execute("SET NAMES 'utf8'");
-        }
-    }
+/// Starting here we have a correct DB conection but me must avoid
+/// to execute any DB transaction until "set names" has been executed
+/// some lines below!
 
     error_reporting(E_ALL);       // Show errors from now on.
 
@@ -201,6 +196,26 @@ global $HTTPSPAGEREQUIRED;
     error_reporting($CFG->debug);
 
 
+/// If $CFG->unicodedb is not set, calculate it because we need
+/// "set names" (below) properly executed *before* performing any
+/// DB transaction
+    if ($dbconnected && !isset($CFG->unicodedb)) {
+        $CFG->unicodedb = setup_is_unicodedb();
+    }
+
+
+/// Set the client/server and connection to utf8 if necessary
+    if ($dbconnected && $CFG->unicodedb) {
+        if ($db->databaseType == 'mysql') {
+            $db->Execute("SET NAMES 'utf8'");
+        } else if ($db->databaseType == 'postgres7') {
+            $db->Execute("SET NAMES 'utf8'");
+        }
+    }
+/// Now that "set names" has been executed it is safe to
+/// work with the DB, but never before this!
+
+
 /// Set a default enrolment configuration (see bug 1598)
     if (!isset($CFG->enrol)) {
         $CFG->enrol = 'manual';
diff --git a/lib/setuplib.php b/lib/setuplib.php
index 7de8bc4892e..53355f2cefa 100644
--- a/lib/setuplib.php
+++ b/lib/setuplib.php
@@ -80,4 +80,42 @@ function make_upload_directory($directory, $shownotices=true) {
     return $currdir;
 }
 
+/**
+ * This function will introspect inside DB to detect it it's a UTF-8 DB or no
+ * Used from setup.php to set correctly "set names" when the installation
+ * process is performed without the initial and beautiful installer
+ */
+function setup_is_unicodedb() {
+
+    global $CFG, $db;
+
+    $unicodedb = false;
+
+    switch ($CFG->dbtype) {
+        case 'mysql':
+        /// Get MySQL character_set_database value
+            $rs = $db->Execute("SHOW VARIABLES LIKE 'character_set_database'");
+            if ($rs && $rs->RecordCount() > 0) {
+                $records = $rs->GetAssoc(true);
+                $encoding = $records['character_set_database']['Value'];
+                if (strtoupper($encoding) == 'UTF8') {
+                    $unicodedb = true;
+                }
+            }
+            break;
+        case 'postgres7':
+        /// Get PostgreSQL server_encoding value
+            $rs = $db->Execute("SHOW server_encoding");
+            if ($rs && $rs->RecordCount() > 0) {
+                $encoding = $rs->fields['server_encoding'];
+                if (strtoupper($encoding) == 'UNICODE') {
+                    $unicodedb = true;
+                }
+            }
+            break;
+    }
+    return $unicodedb;
+}
+
+
 ?>