Saving with a bank Thats different

topsyb

I'm considering taking out a 2yr fixed savings account with the "Islamic Bank of Britain" Im attracted by the ethics of this bank (does not invest in companies that sells Weapons,alcohol,Pornography. to name a few) also they are offering a very good return ,currently 4.5%. Does any one have any experience with this bank.

opinions4u

I have no experience of the bank, although their web site claims a 3.5% "expected profit" for 2 years. I have heard claims that the religious boards of Islamic Banks worldwide share around 100 clerics who are responsible for ensuring that the appropriate Sharia laws have been complied with and that a share of the profits is donated to an appropriate charitable fund. Where the money in the charitable fund ends up may also be unclear. These are claims I have never researched myself, but if you're keen on ethics I would suggest you satisfy yourself of the workings of the organisation first.

100 people would seem to wield a hell of a lot of financial clout which is potentially rather scary.

I'm usually cynical of ethical claims. Ethical banks can still repossess houses, decline little old ladies a credit card and charge fees for going overdrawn. They can also have nasty people as customers who can be involved in things like the arms trade, pornography etc so the "clean" claims are always tainted to a degree.

That said, Co-op Bank make ethical claims and are offering a 5% return for 3 years or 3.75% for 2 years.

natman

Hi,

I have an Indian friend who has suggested I look into this bank for savings, so I have done a little bit of research, however.......

Personally I have been burnt by foreign banks over 2008 and vowed never to take this risk again.
I was burnt by ICESAVE and Kaupthing edge from Iceland.

I had also invested in the indian bank ICICI nad pulled my money out of this institution as I had lost faith with foreign banks.

The co-op as advertised above looks decent, but it may be worth looking at comparison tables and choosing an institution that pays a decent rate and may be consided more 'stable' or secure or less of a risk -

At present Northern Rock are offering 3.5% on 12 month fixes and thats 100% safe
2 year - AA have a 4.25%
3 year Britannia at 5%

Islamic Bank of Britain PLC is a member of the Financial Services Compensation Scheme.
Some peole will advise that if the bank of india is covered by the financial protection scheme of £50,000 then its as safe as any other bank that has the same protection- -which in theoy is true.

Personally, I would be reluctant to save with these due to the foreign routes as I have been burnt a few times before by foreign banks!!

withnell

natman wrote: »

I was burnt by ICESAVE and Kaupthing edge from Iceland.

To be fair you've not really been burnt by Kaupthing - the only change you would have seen is new log in details!

natman

withnell wrote: »

To be fair you've not really been burnt by Kaupthing - the only change you would have seen is new log in details!

I feel i have been burnt -

I had two accounts with Kaupthing -
1 UK one which went bust, my money had gone into the blackhole and I was chasing it round for 6 months - so even though it finally went To ING, ING at that time was being bailed out by its own government, so for me it was very stressful.
My other account was linked to isle of man had had little protetion - again a stressful time.

ICESAVE was also difficult, not knowing if you were going to get your money back or who to speak to etc.

Perhaps being burnt may be an incorrect description, being stressed, upset, and angry were my feelings and vowed never to repeat a foreign banking savings episode again.

Withnell, I am only trying to provide an experience to the OP that I had, others will feel it wasnt a worry, it was all fine, they would take the risk again............ I personally wouldnt. The banking laws and protection schemes from these incidents changed dramatically folowing these collapses, therfore I am suggesting that other people found this difficult.

D1zzy

natman wrote: »

I feel i have been burnt -

I had two accounts with Kaupthing -
1 UK one which went bust, my money had gone into the blackhole and I was chasing it round for 6 months - so even though it finally went To ING, ING at that time was being bailed out by its own government, so for me it was very stressful.
My other account was linked to isle of man had had little protetion - again a stressful time.

ICESAVE was also difficult, not knowing if you were going to get your money back or who to speak to etc.

Perhaps being burnt may be an incorrect description, being stressed, upset, and angry were my feelings and vowed never to repeat a foreign banking savings episode again.

For me the most stressfull by far was with a UK institution -Northern Rock (where the pension lump sum had been parked).
By the time of Icesave and Kaupthing, I was clued uo on 50K limits and the FSCS - and thought at worst we might lose some interest - so no stress and for me the whole thing worked really smoothly

MarkFromCornwall

natman wrote: »

Hi,

I had also invested in the indian bank ICICI nad pulled my money out of this institution as I had lost faith with foreign banks.

Are you saying that foreign banks have suffered more problems than British banks? I was under the impression that some of the British banks had been particularly badly affected. Certainly no ICICI savers have lost any money.

natman

MarkFromMullion wrote: »

Are you saying that foreign banks have suffered more problems than British banks? I was under the impression that some of the British banks had been particularly badly affected. Certainly no ICICI savers have lost any money.

You are correct, as far as I know no one has suffered via ICICI, However for the past 16 months or so I have kept an eye on banks FITCH ratings.

These ratings highlight the amount of risk a particular bank is subject to.

When ICESAVE And kaupthing edge suffered, their FITCH ratings took a serious tumble.
The best banks /banks with less risk are highlighted as AAA rating, ICICI ratings have dropped, there was a lot of forum posts about this some time ago, so wont go into the detail.

But if you have a look at Fitch, you can see the banks ratings - I personally keep an eye on an institution i save with.
ICICI has a rating that is not great, but FITCH also indicate that this Bank seems stable at present.

For example Coventry Building society has an 'A' rating and viewed as stable. whereas - Newcastle Building society has BBB- Rating and is seen in a negative light at the moment because of certain risks.

Northen rock now has a good rating and is seen as an evolving bank, however - THIS DROPPED SIGNIFICANTLY Prior to the collapse.

The fitch is just a tool to keep an eye on things thats all make of it what you will!

Moodys also offer a similar service and Moody's outlook for Indian banks remains negative.

http://www.domainb.com/finance/banks/20091123_credit_outlook.html

agsnu

Moody's and Fitch rated all of those so-called "toxic assets" as AAA. In fact, the Landsbanki and Kaupthing ratings were still pretty strong right until the week when they were taken over by the Icelandic Government, IIRC.

natman

agsnu wrote: »

Moody's and Fitch rated all of those so-called "toxic assets" as AAA. In fact, the Landsbanki and Kaupthing ratings were still pretty strong right until the week when they were taken over by the Icelandic Government, IIRC.

Yes totally agree!
I am just trying to highlight that at present here are tools that can be seen as helpful before making a decision.

I suppose all I am saying is - if a financial institution has been graded as more riskier than another, you need to take this information when making a decision that is personal to you.

gozomark

When the rating agencies say stable, they mean the rating is stable, not the bank.