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Icesave crisis - What happens to those of us with above £50k in our account?
Comments
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thank you sadabbot for your positive reply, you are right - it is natural to panic and jump the gun but nothing's officially lost yet.
I found this on a form on the FSCS site. It says that it is possible to get some return on money over the limit dependant on the rate of recoveries (dividend rate)
http://www.fscs.org.uk/consumer/faqs/deposit_claims_faqs/
http://www.fsa.gov.uk/pubs/other/Tripartite_feedback.pdf
Consumers with deposits above the FSCS limit
7. Those protected depositors who have money deposited over the compensation limit
will receive compensation promptly for the amount of their deposit up to the limit
(currently £35,000), in the same way as depositors with funds below the limit. So all
protected depositors will receive prompt compensation up to the FSCS limit.
8. Depositors with deposits above the limit may also receive additional funds above and
beyond what comes from the FSCS compensation scheme. How much they receive
depends on the rate of recoveries (also known as the dividend rate) from the estate of
the failed bank and how those recoveries are allocated between the FSCS and the
depositor. We have identified three methods for allocating recoveries, which are
broadly described below.
Current loss allocation method
9. The present method is a loss protection scheme, so the depositor is protected up to
£35,000 for the net loss for any protected deposit. This means that the FSCS, in
return for paying compensation of up to £35,000, takes over the depositor’s rights
against the bank and pays over recoveries received from the estate of the bank to the
depositor unless and until the deposit has been fully repaid4.
10. So, for example, assuming a 60% recovery rate, if a protected depositor has
£100,000 with the failed bank, he would initially receive £35,000 from the FSCS.
The FSCS would later receive a 60% recovery (£60,000) from the liquidator and pay
it over to the depositor. So the depositor’s total recovery would be £95,000 and the
loss £5,000. FSCS’s recovery would be nil.
11. To look at this in a different way, the depositor is entitled to a recovery of £60,000
from the failed bank, leaving him, at this stage, facing a potential net loss of
£40,000. But he is also entitled to compensation from the FSCS, which will cover up
to £35,000 of this loss. So his total recovery is actually £95,000.
12. In reality, liquidations of banks can take many years. Therefore, depositors will have
to wait until the liquidator has completed the liquidation to find out how much more
Financial Services Authority 5
they might receive in total, and there is of course no certainty that they will receive
any further payments.0 -
It's early days yet. Iceland bank could be sold onto a larger banking group like Bradford and Bingley was when it was nationalised. Then everyone, no matter what level of savings, would all get their money backKrusty & Phil Madoff, 1990 - 2007:
"Buy now because house prices only ever go UP, UP, UP."0 -
ad44downey wrote: »It's early days yet. Iceland bank could be sold onto a larger banking group like Bradford and Bingley was when it was nationalised. Then everyone, no matter what level of savings, would all get their money back
I agree, that's the best outcome from all this, let's hope it happens - we would all be safe, no matter what then.0 -
Hi All
New to this site - yep you guessed it I've got over £50k in Icesave!
What do people think the prospects are of me changing it to a joint account? I could add my partners name and then get £100k cover (under the current rules) and therefore be OK.
It's not a deposit or a withdrawal, just a change of details. If I managed to do it before the bank goes under (if it does actually go under) would I get the £100k cover. If the answer is yes then I guess I need to try and do it ASAP. Any idea how long it would take to add a second account holder. I have the form and could post the documents tomorrow. Would it take affect from the date of my request or the date the bank processed it?
Yes I am clutching at straws :rolleyes:
Cheers0 -
Lots of possibilities for those with more than the FSCS 50k deposited:
1. the Icelandic government guarantees all savings now the bank has been nationalised (unlikely, I don't think they have enough hard currency to do that).
2. the bank gets sold on to someone else (a la B&B) and all is well.
3. the UK government decides to guarantee all savings (unlikely, Gordon is a swine)
4. the bank is made bankrupt and there are enough assets to cover all deposits (unlikely, although you might get something)
5. you get nothing.
I'd say it's 50:50 at the moment whether we'll see anything in excess of 50k again. The problem is if someone (whether that be the UK or Icelandic governments, or the EU) doesn't guarantee all retail deposits, there is going to be an almighty bank run on any other bank anyone has more than the compensation limit with, causing yet more problems with other supposedly well-capitalised banks.
Crowd behaviour can cause a lot of trouble.
Mike0 -
first E20,000 needs to be reclaimed from the Icelandic compensation system not the UK system. The remainder of the £35,000 would still come from the UK scheme.
Really sorry to all of you who have found yourselves in this position, my heart really does go out to you all. how can his happen? bloody wrong! really dont know what to say :kisses2:0 -
vagabond999 wrote: »thank you sadabbot for your positive reply, you are right - it is natural to panic and jump the gun but nothing's officially lost yet.
I found this on a form on the FSCS site. It says that it is possible to get some return on money over the limit dependant on the rate of recoveries (dividend rate)
http://www.fscs.org.uk/consumer/faqs/deposit_claims_faqs/
http://www.fsa.gov.uk/pubs/other/Tripartite_feedback.pdf
Consumers with deposits above the FSCS limit
7. Those protected depositors who have money deposited over the compensation limit
will receive compensation promptly for the amount of their deposit up to the limit
(currently £35,000), in the same way as depositors with funds below the limit. So all
protected depositors will receive prompt compensation up to the FSCS limit.
8. Depositors with deposits above the limit may also receive additional funds above and
beyond what comes from the FSCS compensation scheme. How much they receive
depends on the rate of recoveries (also known as the dividend rate) from the estate of
the failed bank and how those recoveries are allocated between the FSCS and the
depositor. We have identified three methods for allocating recoveries, which are
broadly described below.
Current loss allocation method
9. The present method is a loss protection scheme, so the depositor is protected up to
£35,000 for the net loss for any protected deposit. This means that the FSCS, in
return for paying compensation of up to £35,000, takes over the depositor’s rights
against the bank and pays over recoveries received from the estate of the bank to the
depositor unless and until the deposit has been fully repaid4.
10. So, for example, assuming a 60% recovery rate, if a protected depositor has
£100,000 with the failed bank, he would initially receive £35,000 from the FSCS.
The FSCS would later receive a 60% recovery (£60,000) from the liquidator and pay
it over to the depositor. So the depositor’s total recovery would be £95,000 and the
loss £5,000. FSCS’s recovery would be nil.
11. To look at this in a different way, the depositor is entitled to a recovery of £60,000
from the failed bank, leaving him, at this stage, facing a potential net loss of
£40,000. But he is also entitled to compensation from the FSCS, which will cover up
to £35,000 of this loss. So his total recovery is actually £95,000.
12. In reality, liquidations of banks can take many years. Therefore, depositors will have
to wait until the liquidator has completed the liquidation to find out how much more
Financial Services Authority 5
they might receive in total, and there is of course no certainty that they will receive
any further payments.
Thank you for providing this link. I don't think this has been discussed much yet so its very useful to know.0 -
I'd say it's 50:50 at the moment whether we'll see anything in excess of 50k again. The problem is if someone (whether that be the UK or Icelandic governments, or the EU) doesn't guarantee all retail deposits, there is going to be an almighty bank run on any other bank anyone has more than the compensation limit with, causing yet more problems with other supposedly well-capitalised banks.
Crowd behaviour can cause a lot of trouble.
Mike
I know some think I'm bound to say this but I totally agree. If the guarantees are not 100% and universal hen it will cause a run on some banks and thus destabalise the markets further.
Surely a blanket guarantee for all deposits would calm the markets and make the prospects of banks going under (and the need to pay out under the guarantee) m uch less likely.0 -
government takes its cut of interest via tax, could you offset any losses against tax0
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I'd be very surprised if this current administration pays anything over the required 50K.
They have always had a "means tested" view from care to welfare to other forms of policy. In this case the mean is clearly the 50K
If your below the mean then you normally recive help, above then pay up your loss.
I feel terrible for people in this situation it could take years to resolve most likely in court.
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