More Than FSCS Limit Safe in HBOS?

DavidAC

Given the Govenment backing of HBOS is it save to have more than the FSCS compensation limit in the HBOS group of companies?

LIT_2

Bumping this to the top as I've been wondering whether HBOS deposits are now seen as 'safe' in the way Northern Rock or NS&I deposits seem to be. Any thoughts?

Reaper

Officially the government refuses to promise balances over £50k are safe, however they have made it pretty clear that informally they are prepared to cover the whole lot to prevent people losing faith in the banking system.

As a saver in a UK bank I think you can feel pretty secure, though I have an "official" line too which is to reccomend spliting it for peace of mind.

However if your money is with a bank with foreign roots (eg ICICI) I firmly suggest staying below £50k. Although the government helped with Icesave they did make it clear it was a one-off and it did not mean they would be obliged to do it again.

earlgrey_3

There is always a risk to savings however small whether they are handed to someone else to look after or kept in the mattress. That said, my judgement would be that savings with all British banks are safe and arguable that the FSCS has now become irrelevant.

The reason that the government has bailed out a series of banks is because if one went the damage to confidence would cause the rest to follow. Having now bailed out savers of Icelandic banks regardless of any limits or responsibilities it would be politically impossible not to do at least as much for savers with any British bank that failed.

If we did ever get to the stage where the government was unable to bail out a British bank depite the political backlash that would follow, the financial situation would be so dire that the FSCS would probably go into meltdown anyway. It would be time to get in a supply of baked beans and bolt the doors.

The risk with foreign banks is greater as I pointed out in the case of Icesave back in the spring.

ShelfStacker_3

earlgrey wrote: »

If we did ever get to the stage where the government was unable to bail out a British bank depite the political backlash that would follow, the financial situation would be so dire that the FSCS would probably go into meltdown anyway. It would be time to get in a supply of baked beans and bolt the doors.

This is what I've always said - if one of the big banks had the opportunity to fail, you'd have bigger problems than your savings disappearing.

DavidAC

Thank you for the replies. I have an application form for a fixed account on a good rate. The account has been withdrawn, but I should still get it if I post it today. I decided to put in a small opening deposit. After it is opened I will have a few days to make further deposits. Hopefully they will take their time opening it so I can make a decision on a further deposit after the HBOS vote on the Lloyds merger.