Kaupthing & Icesave: MoneySavingExpert.com Official Note

Former_MSE_Dan

Hi folks,

In case it is of interest, here is a comment we are just sending out to the press at the moment, following this mornings events:


[FONT=&quot]MONEYSAVINGEXPERT.COM NEWS RELEASE
[/FONT][FONT=&quot]Tuesday 7 October 2008 [/FONT]

[FONT=&quot]It's small ISA savers with most to lose in Icesave[/FONT]

"As news floods in about Icesave, it's crucial the UK Government clarifies its position, if not it's unfairly leaving people panicked and worried. Countless small savers have a few thousand in Icesave's best buy cash ISA. The ISA scheme was set up by this Government to encourage savings, and as such it has responsibility."
"While I hope it won’t come to that, if the compensation scheme is needed, Icesave's structure means the first €20,887 must come from the Icelandic compensation system and the remainder of the £50,000 protection from the UK scheme. Meaning its smaller savers have the most to worry about."

"But what if Iceland can’t pay this compensation? While it's said to have a reciprocal arrangement with other Scandinavian countries to protect its compensation scheme, the UK should be prepared to step in if necessary."
"Yet the Treasury isn't answering whether it will pay that money if Iceland can't. It needs to assure UK savers that the whole £50,000 will get to them one way or another. I first asked this question six months ago; it wasn’t answered then, it hasn’t been answered yet and now it's almost too late."

[FONT=&quot]We need to know what a British bank is[/FONT]

"UK savers have been told their savings are safe in British banks. This protection is two pronged; first the Government says it'll step in, as in the case of Bradford and Bingley and Northern Rock, and then as a belt and braces protection we have the Financial Services Compensation Scheme protecting £50,000 per person per institution."
"Unlike Icesave, banks thought of as 'foreign' like Kaupthing and ICICI are actually UK banks fully governed by FSA regulators; it's only their parent companies which are from overseas. Due to their high rates they have billions of UK savers' money in them and they are fully protected by the £50,000 scheme."
"Yet does the Government see these as 'UK Banks' and would it bail them out if there were problems or is it only the last resort compensation we can rely on? This needs an answer... Mr. Darling, what is a British Bank?"

Daily updated, bank-by-bank Savings Safety guide at www.moneysavingexpert.com/safesavings

mike_in_easenhall

I have read your post & article on safety of Icelandic banks and I fully understand that Kaupthing Edge savings are now (as of today) protected up to £50000. However, what would happen to my savings if the Icelandic government nationalised the bank, as they have just done with Icesave, the consequence of which is that deposits and withdrawals are frozen. I know my money would still be safe, but how long could or would it remain frozen. Any views from the experts?

Former_MSE_Dan

As there is no precedent to this, i'm afraid we are in the dark for the moment. However, there is no reason to believe the payout from the UK FSCS would take any longer than if it where due to the failure of a 'british bank', Kaupthing Edge is regulated identically to the rest

South_Bound

Just for the record, I would like to thank Martin and the MSEs for the information they have provided on this and other issues.

As one of the few people to sell a house in living memory, I invested the equity following consideration (and not blind taking of advice) of the information available to me on this site. Consequently, I have money spread across 4 fixed rate bonds, an instant access savings account and an ICESAVE ISA. I went into this process well-informed about the guarantees associated with each product. One of my bonds is with KE, but I am as confident in the guarantee for that as for the other 3 - that money is staying put until this all calms down.

Yes I am a little concerned about the £7200 in the ISA, but there is no use blaming anyone else for it, I saw the interest rate and decided to accept the risk after checking it out in 'How Safe are my Savings?'

First post, but a long term subscriber and forum reader.

mike_in_easenhall

Thanks MSE Dan - but I suppose I was thinking that a 'nationalisation' of KE might mean something different to KE 'going bust'. Would the UK FSCS pay out compensation if deposits and withdrawals were frozen, or would they have to wait until KE actually went bust? Or is there no difference? See what I mean?

jetfighter

I just want to say thank you to Martin and his team for keeping us all updated.

It would be very easy for the MSE team to run and hide from the problem, after recommending the Icelandic financial products, but instead they are working hard to find out news for us all. I really appreciate that.

I admit it does concern me but it's good to know we can come here for up-to-date information. We have about £12k with Icesave. Luckily we don't need the money just yet. My real concern is that it will take a very long time to get it back, but I guess all we can do is wait!

Will keep an eye on this thread for further updates.

KTF

Interesting that https://www.icesave.nl seems to be working as normal (although its slow). Should that not be 'closed' as well?

danmck_2

Hi

First post, I have all my savings (6k) in an Icesave "easy access" account. I understand that there is quite a bit (understatement!) of confusion about getting money back, but I was wondering if there is anything I should be doing now.

Any advice gratefully received!

mattytun

hi i put 50 grand in KE current account otherday do you think i should move it back

trf197

I too would like to add my thanks for Martin and the MSE crew. My wife and i have over £13,000 in ICSESAVE in ISAs and are a little worried about what will happen but i think Martin has done an excellent job over the last few years of educating people about all aspects of people's finances. I don't blame Martin - as he said in his own reply he has always given 100% of the information when he talks about any product or service.

Also this site has had the best information so far for me trying to find out what is going on - keep up the good work everyone!

trf197