Kaupthing, ICICI or the Post Office?

oxymore

Hi, I'm looking to invest in a 1-2 year fixed rate bond. After looking through all these threads, it seems that ICICI have really bad customer service. I can't seem to find many complaints about Kaupthing, has anyone had a problem with them? I understand they are up to £35k in the FSCS too so it should be like any UK bank? Or is it just wise to save via the Post Office?

They don't vary much in rate.. Post Office at 7.05%, Kaupthing 7.15% and ICICI with 7.2% so probably won't be much in terms of interest. I will receive gross interest as well.

Any suggestions?

Thanks

chinbergs

Hi Oxymore

From my experience, ICICI did what they were supposed to do, but I just didn't feel confident with using the website and I didn't enjoy the experience of saving with them because everything looked (website, letters etc) a bit shoddy. The customer service was ok but not great.

Kaupthing have been really efficient and get everything done, and I feel confident using their website and I think they have a good brand. I even like that they show you the amount of interest raised as it goes up on a daily basis (it's not added to the account, but they show you the accumulative amount of interest).

I haven't had experience of Post Office.

Based on my experience, I would definitely recommend Kaupthing over ICICI - because it's a nicer company to deal with (better customer service, better website/consumer experience) and just feels safer.

LongTermLurker

chinbergs wrote: »

Based on my experience, I would definitely recommend Kaupthing over ICICI - because it's a nicer company to deal with (better customer service, better website/consumer experience) and just feels safer.

dddddditto

username

Can recommend Kaupthing's customer service. All calls/emails have been replied to swiftly and with a friendly manner. I find KE's internet banking a bit ropey and unresponsive at times, but the interest rates are good so it makes up for niggling little problems.

natman

HI,
I have accounts with both ICICI AND Kauthping edge. I would agree that K/E Does seem a lot more sleek to use, but I personally have not had any issues with either. I have been very happy with ICICI AND K/E. All my queries have been answered very well. though like others i have read poor experiences with ICICI.
I have had my ICICI Hi save account for over a year, and I have two 1 year bonds with them, one at 6.65% and one at 7%, so the 7.2% would be the option i would go for...........

Were as I have only had my Kaupthing account for a month, and fix term bond for the same time and no problems.
I like them both, I would reccomend both..............I would go for the higher interest.

Andy_McDonald

Just caught up with this thread. Could any of you guys, especially those with a Kaupthing online account, please have a quick view of my new thread just posted about security issues on opening new Internet-based accounts and transferring money into same?

Your experiences clearly would be extremely valuable in answering my concerns.

Many thanks to anyone who may respond.

oxymore

Thanks for the replies, I've decided to go for Kaupthing. ICICI seem to be a bit slow getting back to me and have only got one email from them whereas the other applications have already been processed. Although to be honest, the difference of interest I'd receive between Kaupthing and Post Office is only £18, I like the fact that you can monitor Kaupthing online whereas I can't imagine the service of the Post Office being very good even though it might seem safer? If something were to happen, would Kaupthing and Post Office be as safe as each other?

Thanks

LongTermLurker

oxymore wrote: »

If something were to happen, would Kaupthing and Post Office be as safe as each other?

Thanks

Yes, they are both fully regulated by the FSCS and covered up to £35k.

oxymore

Just read this article. I suppose although it may be covered by the FSCS, you would get your money back if it were to go bankrupt, but it could take years, and that's potentially a lot of interest (£1000s) lost during those years. According to the article, Kaupthing seem to be the worst on this scale. Would the Post Office be more sensible in this case?

An article by James Ferguson on the internet that I've posted here on how to spot the riskiest banks.
The whole point about the 'credit crunch' - is that it means banks won't or can't lend as easily or as cheaply as they once did.
The reason for this is that they are under-capitalised, either because losses have eroded their capital base or because they have had to take off-balance sheet loans back onto their books (in reality, much the same thing) This is a glorified way of saying that some banks are (at least technically) bankrupt.

Now, the system doesn’t like to admit such things - for obvious reasons - so we can expect the banks along with the central banks, such as the Bank of England and the regulators such as the FSA to try to keep it under wraps.
As such, it is highly unlikely that any bank will be allowed to fail (witness Northern Rock, which isn’t even a real bank) but that doesn’t stop the markets having a view as to who they are least comfortable lending to and which banks therefore need to pay more to get their hands on the cash they need to keep operating. We can get a view on this by looking at the interest rates the banks offer to us on their savings accounts - the higher the rate clearly the more desperate they are for cash.

However another way to gauge the risk of your bank account it is to look at the credit default swap market. Credit default swap (CDS) spreads measure the premium to the risk-free interest rate that a bank can expect to pay in the market for 5-year loans. The higher the CDS for any given bank, the riskier the market thinks that particular bank’s debt is.

So what is the market telling us now? Riskiest of all the major banks is HBOS, with a senior 5-year debt premium of 236 basis points (2.36% above the 5-year gilt yield of 3.8%, i.e. 6.2%). 6.2% is therefore what they have to pay the market for funds. (If they’re paying you much less that’s not a good risk/reward). RBS, Santander (Abbey National) and Barclays aren’t much better but HSBC and Lloyds are considered by the market to be the safest. If you can get a good rate from either of these banks, then given the risks the market thinks you’re taking, that’s a good deal and you should be able to sleep well at night.

Then, there are the foreign banks who are offering us internet savings accounts. The basic rule of thumb here is: if they’re ING, they’re no worse a risk than a UK high Street bank. If they’re Irish, they’re likely to be over leveraged and a bit more of a worry (especially Anglo Irish Bank). But if they’re Icelandic, then be afraid; these banks are starting to be priced for bankruptcy risk.
Kaupthing is now having to pay almost 8.5% more than 5-year government bond yields (i.e. 12.3%) to raise funds. Kaupthing’s savings account pays just 6.5% AER, which doesn’t even come close to compensating us for the risk I’d say. The markets seem to be telling us that there is a very real default risk here. Glitnir Bank is not much better and even Landsbanki (owner of the popular Icesave internet banking business) has to pay the credit markets 6.0% more than risk-free rates and 4.2% more than ING does, for funds.

Given that Icesave pays 6.05% on their easy access internet savings account and ING pays 6.0%, perhaps shopping around for the highest savings rate right now is not actually the best thing to do. Perhaps, just perhaps, we should pay more attention to the risk side of the equation too.

So who’s best on the risk/reward basis? Lloyds TSB has the lowest current CDS spread (1.3%) of any UK bank. For one year, Lloyds’ internet account is paying 5.5% (dropping to 4.5% after one year is up) as long as you have £100,000 to save. This looks like the safest place to park your savings for the time being if the credit markets are anything to go by.

Worst CDS Ratings:
1. Kaupthing 833.3
2. Kazkommerts 766.7
3. Glitnir Bank 757.5
4. IKB 612.4
5. Landsbanki 604.6
6. Banca Italease 397.0
7. VTB Bank 332.5
8. Anglo Irish Bank 322.7
9. HBOS 236.7
10. Sberbank 221.3
11. West LB 212.5
12. UBS 209.0
13. Natixis 205.0
14. Bank of Ireland 202.5
15. Allied Irish Banks 195.8
16. Dexia 195.0
17. RBS 191.7
Source: Bloomberg (17/03/08)

LongTermLurker

oxymore wrote: »

Just read this article. I suppose although it may be covered by the FSCS, you would get your money back if it were to go bankrupt, but it could take years, and that's potentially a lot of interest (£1000s) lost during those years. According to the article, Kaupthing seem to be the worst on this scale. Would the Post Office be more sensible in this case?

An article by James Ferguson on the internet that I've posted here on how to spot the riskiest banks.

Source: Bloomberg (17/03/08)

Scaremongers - and that's an ancient artical - 5-6 months is a long time ago.

Why should it take years? KE have exactly the same cover as the Post Office - the FSA say it should take no more than 3-6 months.

Now, the system doesn’t like to admit such things - for obvious reasons - so we can expect the banks along with the central banks, such as the Bank of England and the regulators such as the FSA to try to keep it under wraps.

Reads like a justification for UFOs :rolleyes:

Jonbvn

Seems like a justification for !!!! savings accounts!