Santander!!!!!!

grey_gym_sock

IIRC, the government pays compensation for the FSCS upfront, and then recoups its money from a levy on the financial services industry of up to £4bn per year.

the "interesting" question is what would happen if there were such big bank failure(s) that £4bn per year wasn't enough to pay the government back. i imagine that, if the government thought the industry could survive a higher levy, they'd increase the maximum levy. but if not ...?

(BTW, i feel more south british than english.)

innovate

grey_gym_sock wrote: »

IIRC, the government pays compensation for the FSCS upfront, and then recoups its money from a levy on the financial services industry of up to £4bn per year.
)

Not sure that it works like that, tbh. The only 'levy' that I am aware of is the FSCS levy on the industry (most recent one here). Happy to get corrected though!

In the case of the IceSave collapse, the government guaranteed retail investors all their deposits (no limit), and then got the FSCS to administer the payout. This was highly unusual because IceSave wasn't FSA regulated, and therefore there was no FSCS provision for them. The debate over recovery of the funds from Iceland is still ongoing, I believe.

In some smaller cases, the FSCS have compensated depositors from FSCS funds.

jimjames

More info here

http://www.fscs.org.uk/industry/funding/levy-information/

My understanding is that in the event of a major default the cost woul d be covered by the Treasury and paid back by the FSCS over a number of years.

srcandas

grey_gym_sock wrote: »

(BTW, i feel more south british than english.)

If the Scots want independence will you apply for dual nationality?? :D:D

Seriously if the Scots want independence I wish them all the best and if they don't I welcome their decision. Their culture adds greatly to life on these islands. As long as the decision is open and honest.

But for those who will vote, including the many English who live in Scotland, they need to consider these details.

But enough I hear many saying; for another thread perhaps :beer:

innovate

jimjames wrote: »

More info here

http://www.fscs.org.uk/industry/funding/levy-information/

My understanding is that in the event of a major default the cost woul d be covered by the Treasury and paid back by the FSCS over a number of years.

I can't see anything that suggests that the Treasury is committed to paying anything at all, or to advancing any monies to the financial services industry

As far as I understand,

1. the FSCS is independent of the government and the financial industry, but their provisions form a fundamental/mandatory part of the licences the FSA grants to financial organisations
2. the FSCS has an annual capacity of max £4.03bn, which is expected to cover the liabilities.

IMO, it is brilliant news that there is nothing that commits government to come to the rescue of any failing bank. It would be pretty terrible if banks could just go bellies up and point at governments for sorting out the depositors.

Of course, in any financial armageddon scenario, the government, or the IMF / other foreign governments might come to the rescue. As far as they are able, and willing, to.

Before we get totally despondent, however: we do each have an £85K cover for our deposits in each financial group. And no reason to exepect an imminent collapse of any of the UK high street banks.

soulsaver

innovate wrote: »

Not sure that it works like that, tbh. The only 'levy' that I am aware of is the FSCS levy on the industry (most recent one here). Happy to get corrected though!

This was highly unusual because IceSave wasn't FSA regulated, and therefore there was no FSCS provision for them. The debate over recovery of the funds from Iceland is still ongoing, I believe.
.

IceSave was authorised by the FSA with limited regulation and was covered by FSCS compensation guarantees continuously whilst taking deposits in the UK. The first €20k in the event of a default should have come from Icelandic guarantees. The balance upto £35k was due from UK compensation scheme at the time of their collapse.

opinions4u

jimjames wrote: »

More info here

http://www.fscs.org.uk/industry/funding/levy-information/

My understanding is that in the event of a major default the cost woul d be covered by the Treasury and paid back by the FSCS over a number of years.

That's what happened with Bradford & Bingley.

But the Treasury is not required by statute to act in such a way. That's a political decision for whoever is running the asylum at the time.

Reaper

In practice I don't believe the government will ever let savers in UK banks lose out if they have kept within the FSCS limits because keeping faith in the banking system is essential or all is lost. Investors accept risk, savers do not.

sabretoothtigger

The gov do not pay, the banks do. It is their bill to pay. So if there really was a large amount due, every bank that has retail depositors is required to contribute from profits in proportion.

If there is no profits it rolls forward annually until they have the money owed. In the event banks cannot cover, gov is not required to pay it just stays as a tax on any future profits. In theory it might take some time, however many banks are profitable in normal times.

The gov may choose for political reasons to handle debts, however a company like RBS has potential of over 1 trillion to clear before paying out on retail hence the gov covered for them any shortfall temporally, it was a political gesture.
Both Lloyds and RBS only recently paid back 2008 debt to gov. Both are being forced to offload large parts of the balance sheet and also increase reserves so it cannot happen again.

I never heard of Santander requiring help, they went shopping in 2008 as prices got slashed. They never took the B&B debt for example because it was partly trash including USA car loan debt.

I rank them like HSBC, very subdivided and balanced. EAch country being separate is a strategy they kept for years.
The risk is South America, Spain is old news and bad growth for many years but if revolution occurs in spanish speaking countries abroad it would be dire for them

opinions4u

sabretoothtigger wrote: »

I rank them like HSBC, very subdivided and balanced. EAch country being separate is a strategy they kept for years.
The risk is South America, Spain is old news and bad growth for many years but if revolution occurs in spanish speaking countries abroad it would be dire for them

it doesn't matter how well balanced they are if an ill-informed run on the bank takes place.

Good post though.