Anyone here moving their Santander savings?

michaels

Mostly agree except I don't think the govt would treat deposits differently if they were covered by the FSCS, whichever bank they were with, it would be too open to legal challenge.

oldvicar wrote: »

I would suggest you are wrong.

Firstly the government does NOT provide the depositor guarantee - the banks do through the independent FSCS. Whilst the government has said it will lend the bank guarantee scheme money to meet the £85K guarantee, and I presume it will ('printing' as much as it needs if it has to), that is not the same as rescuing a failing bank. With NS&I the government owns the lot and is responsible for its debts and for repaying depositors in full - this is a much stronger guarantee than a promise (with NO obligation in legislation to actually do so) to lend sufficient money to a guarantee scheme funded by the banks.

Secondly my original comment did suggest that the government probably would back the £85K depositor guaranteees. I am pretty sure it would for the first bank to collapse, and the second, and the third, and the fourth, and the fifth, etc. At some stage it would become clear that there is no way the remaining banks could afford to pay the ever increasing levies needed to repay the government. But the government would continue lending the scheme enough for the guarantee long after it is obvious it will never be repaid. And then at some point the government would effectively nationalise what is left of the UK banking system - at least those 'too big to fail', but with foreign subsidiaries and possibly any UK minnows allowed to collapse. Throughout the process NS&I would remain safe, other than being forced to close its doors to new deposit(or)s.

Finally, presuming as I do that the government would back the depositor guarantees (even though it doesn't have to) if it had 'run out of money' as you suggest it would firstly back NS&I commitments in full. But there might be some wiggle room on the FSCS depositor guarantees at other banks through, for example:
(a) Delaying payment - although the FSCS aims to pay out quickly it is not an obligation. If the government were providing the funds I expect it would actually provide them immediately, but it could if it wished say "we will fund the guarantee as soon as we can and everyone will get their £85K ... but not just yet". Although it could 'print' enough to fund the guarantee at the press of a button, it might deliberately delay as a means to try to keep the lid on hyperinflation ... and the £85K when paid a few months later wouldn't be worth quite so much.
(b) Reducing the £85K guarantee. Remember the guarantee is there because of EU legislation requiring a guarantee of EUR 100K. The £85K is only an approximate equivalent, with the clear intention to reset the equivalent from time to time. So the guarantee is really a guarantee in Euros. Now suppose the Euro were to collapse against the Great British Pound because of e.g. all those spanish banks failing (unthinkable, isn't it) the guarantee in £££s would be reset downwards, just when you would least want it to be.

Sorry to go on. Perhaps I could summarise in the words of some more frequent posters: "Doomed, we're all doomed" . But then I think we will actually survive. However because we are pinning so much on Sir Mervyn & Co.'s nautical and meteorological skills to chart a course through the storm, I would rather be wearing a lifejacket and sitting in a lifeboat than be left clinging to the wreckage of the Armada.

grizzly1911

michaels wrote: »

Mostly agree except I don't think the govt would treat deposits differently if they were covered by the FSCS, whichever bank they were with, it would be too open to legal challenge.

I follow what OV is saying but tend to concur with your view.

If the Government gave the slightest hint it wasn't standing behind the guarantee it would make it worthless across the board for UK registered banks.

OV makes a good point bout the 100K Euro limit, £80k today and surely due to slide further.:eek: This does apply across all registered banks irrespective of where the parent is, even Scotland;)

I take it the limit for compensation would be the limit in force when the deposit was made, for fixed funds?

For the wealthy there aren't that many independently registered deposit takers, offering reasonable rates, out there.

ChiefGrasscutter

The value for the £85K limit would be the value of the savings held at the time of the collapse - which would include accumulated interest as well as invested capital.

I agree with you that HMG would stand behind the FSCS.

My opinion is that this is why Gordon Brown bailed out all the Icesave depositors 100% regardless of how much money a customer had in it.
Had he not, come that next Monday morning there would have been a full scale run on UK banks and building socieities as, at that time, many more people had above the then FSCS limit of £50K in a single institution.....and they would have all seeking to split it up and move it somewhere else ASAP. The result would have been total overload of the BACS system with huge sums moving around, and you can just imagine how a breakdown of the banks/B.Soc's online systems/the BACS system could snowball into full scale mayhem.
So to prevent this and keep everyone calm carrying one as normal, G.Brown really had no option other than a full 100% bailout of depositors.

oldvicar

But now the likes of MSE tell people not to put more than £85K with any one banking group in order to be safe. People have been splitting their savings to avoid going over the limit, and the BACS system etc has not broken down since its been done over an extended time. There are not that many people with vast savings to deposit anyway. But the very rich have been pouring their money into NS&I where the guarantee is practically limitless (subject to max deposit limits though) - they have a relatively huge proportion of their direct saver accounts with 6 figure sums in them, and hence the reason they slashed the interest rate on them a few months back to try to discourage rich people depositing their money with them.

grizzly1911

[QUOTE=ChiefGrasscutter;53211333The result would have been total overload of the BACS system with huge sums moving around, and you can just imagine how a breakdown of the banks/B.Soc's online systems/the BACS system could snowball into full scale mayhem.
So to prevent this and keep everyone calm carrying one as normal, G.Brown really had no option other than a full 100% bailout of depositors.[/QUOTE]

Quote not only the the BACS operation of transferring but the Banks each trying to establish their liabilities at any given time, for liquidity/reporting purposes, with money switching back and forth.

grizzly1911

ChiefGrasscutter wrote: »

The value for the £85K limit would be the value of the savings held at the time of the collapse - which would include accumulated interest as well as invested capital.

.

If you invested say £85K (current limit) on day 1, day 20 the FSCS now sets it £75K (new limit) and the institution encounters difficulties on day 40 would you be potentially out of pocket?

Seems a little unjust if you put your savings in a safe, guaranteed to current limit, institution. especially if it is in fixed/notice product where you're choice may have been swayed by that guarantee.

I guess as the guarantee hasn't gone down, thus far, it may be hypothetical. As happened with the Icelandic issues the Government will take a view at the time of problems.

ChiefGrasscutter

You raise an interesting hypothetical situation to which I have no idea what would happen.
You might have justification should such a thing happen by requiring the odd few £K of your savings to be released back to you free of charges etc to bring your total back under the limit - as the terms under which you considered your savings choice had changed.
Of course the savings group would object as it was not them that made the change.

I can certainly remember people on here when the limit was £50K saying that they were only putting in £45K in a fixed term with some group and very deliberately leaving the extra £5K available 'unused' so to speak such that as the interest accumulated their total would still be below the then £50K limit.

Your comment of being unjust rings a bell with the Icesave debacle where those with variable interest rate accounts got the opportunity to quietly withdraw their money some time in the months leading up to the bust, while those on fixed term/rate accounts did not and could do nothing.

The-Joker

smartn wrote: »

My understanding is we get the same protection in Santander as any British bank up to £85000. Please correct me if I am wrong.

OK you may well be protected, but how long and how much hassel to get your money back when Spain goes down? Its like trying to get an insurence company to pay up, they will make you jump through hoops.