Are your savings safe? article discussion

1) There is pretty much no such thing as a 'british' bank anymore - This is not 1950. All the major high street names, have share capital spread all over the place. are run by americans, and are active in dozens if not hundreds of countries, and depend on global markets for their financing. They are international banks who are headquarteted in the UK

The are as British, as Ford, or Shell, or Macdonalds.

2) The british governement is no more capable of nationalising Barclays or HSBC, or any bank other that A&L or B&B than I am.
Even HBOS, which is small by comparison, still has an asset/liability base of £650bn a market cap of £20bn , and they print bank notes which are legal tender!!! would be too big to nationalise.

So say hbos goes down, you honestly belive the goverment, can cover a liabillity base that is a quarter of the UKs GDP.


3) Northern rock was a one off. A provincial little bank, with ideas above it's station, who played in the big boy's playground and got burnt.

4) The FCSC scheme aims to pay out within 6 months, but if they sums required exceed £4BN, it reserves the right to call on the goverement to make a desicion, about compensation.

So what's riskier, a huge bank, which if it goes down... the goverment / world are impotent to do anything about it, the bigger they are the harder they fall. Too much for the fcsa to pay out on. Mass panic.

Or a small bank covered by two schemes one in the uk, and one in the HQ country. With a smaller asset base. That can easily be managed / or taken over by a larger rival, or nationlised.

You pay your money, you take your choice.

from the MSE article ...
Q. Will my bank/building society will go bust?
A. In the first incarnation of this article, in September 2007, my answer was "extraordinarily, unthinkably, ridiculously unlikely", now I believe it is "unlikely".

Didn't that original article include something along the lines of :
"It is as unthinkable as Cardiff City winning the F.A. Cup" ... or something like that. :rotfl:

1echidna wrote: »

Re Ianmr65

Could any government actually admit that it was impotent though? Surely not in the nature of governments especially British ones to admit impotence? Wouldn't they just print money?

That's what the US fed is doing right now. Printing money to stave off recession, and it only just, just managed to pull off deal for it's fifth biggest investment bank.

In the case of the UK they'd spin it and would ceratinly not admit that they were too impotent, but they could never do it. And Certainly in the case of HSBC, Barclays, and Lloyds, and RBS would not be allowed to by the Fed and the ECB.

1echidna wrote: »

I can understand the time (and my situation is that I can afford to wait for the machinations of the FSCS) but why effort or stress? The FCCS surely does not expect the individual investor to assist in recovering monies available in the event of failure by a foreign bank operating under the scheme?

It's never been put to the test has it. I can just foresee all sorts of obstacles in a situation where HMG has no vested interest in keeping the lid on things. For my part the difference in interest rates is not worth the risk in today's climate. Other people obviously think differently. Each to their own.

murphydavid wrote: »

Why really did the government bail out Northern Rock? They fear the domino effect. It is almost certain that if one bank is allowed to fall then there will be a mad panic to withdraw money from a lot of banks. They would almost certainly fail. The FSCS would be overwhelmed. This way leads to madness!

If another Northern Rock occurs HMG will have learned the lesson and would allow it to be taken over, like Bear Stearns will be. After the fiasco of Northern Rock they would realise firstly that they may as well guarantee without having to nationalise, and secondly that they can't afford to worry about the interests of shareholders. Failing that they would nationalise again. Whatever draconian measures are necessary in order to protect the banking system from collapse would be taken -- there is no alternative.