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'How safe Is Santander UK? - What I really think' blog discussion

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'How safe Is Santander UK? - What I really think' blog discussion

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MSE_MartinMSE_Martin MoneySaving Expert
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This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.




Please click 'post reply' to discuss below.
Martin Lewis, Money Saving Expert.
Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.
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  • PmarmaladePmarmalade Forumite
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    I have all my savings in a Santander ISA (well within the £85k!) but I'm just wondering in the unlikely event they went bankrupt would I just get the cash back from the government and lose my entire tax-free wrapper?
  • ReaperReaper Forumite
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    In the case of Icesave when the compensation money was paid a certificate came with it that said it was from an ISA and you could then send the money to another ISA provider along with the certificate to open a new one and keep the tax free benefits intact.

    I am sure the same thing would be done again if it ever came to it.
  • ReaperReaper Forumite
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    There are a few more things you could add to reassure people.
    1) The Spanish banks currently under pressure are the small ones plus Bankia. Banco Santander is not currently in the firing line.
    2) The UK arm of Santander does 90% of its business in the UK (because it is made up of Abbey and other old UK building socities). It therefore has much less exposure to Spain than a bank like Barclays which nobody is making a fuss about.
    3) The FSA has had a "regulatory order" in place since December stopping Banco Santander withdrawing money from the UK arm without its approval. Interestingly according the the Sky Blog this was at the request of Santander UK!
  • jamesdjamesd Forumite
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    Pmarmalade wrote: »
    I have all my savings in a Santander ISA (well within the £85k!) but I'm just wondering in the unlikely event they went bankrupt would I just get the cash back from the government and lose my entire tax-free wrapper?
    You get a certificate that you provide to an ISA provider and that means the money won't count again as part of your ISA allowance. This happened in several cases already, Icesave and the Southsea Mortgage & Investment Company for cash ISAs and Keydata, a stocks and shares ISA provider and assorted other S&S ISA providers involved in that event. There's currently a little uncertainty for amounts over £85,000, the FSCS limit and you should not count on it for amounts over that.

    In addition, to formalise these arrangements, there are to be new rules on reinstating ISAs that will allow the full amount in a cash ISA to be paid into another cash or S&S ISA even when an investor has not received full compensation and certificate from the FSCS. This includes money that exceeds the £85,000 FSCS cap, so you could put in £100,000 even if you only received £85,000 from the FSCS. Similar treatment for S&S ISA investments. These rules aren't in effect yet.

    So this is being handled very well and there's no need for any concern about it unless you have more than £85,000 in a single cash ISA or investment.
  • I know savings are safe but will the Santander Investment ISAs (Guaranteed Growth Plan 9) and the Direct Share Investments (Guaranteed Growth Plan 9) be covered by the FSCS £85,000?
  • edited 20 May 2012 at 7:00PM
    John_PierpointJohn_Pierpoint Forumite
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    edited 20 May 2012 at 7:00PM
    I will always remember the weekend, where it was pretty well obvious that Lehman Bros was a bankrupt bank (13th September 2008), far more significant to the Western World than the events of 9/11.

    Lehman's was a 24 hour bank, and the USA authorities/management waited through the weekend in America before closing it down and conveniently grabbing the free cash that slopped round the world following the sun. Legally that had become American money in the game of musical chairs and someone had taken out nearly all the chairs, especially the ones for the players who were sleeping at the time.

    Gordon Brown did something similar to an Icelandic Bank, using the terrorism act to seize its balances in the UK.

    This weekend I have heard the question "What happens if Santander sends its balances to Spain". asked 3 times and the "expert" answer each time has been "The FSA would not allow it" - it would be breaking the law.

    I have also picked up (literally Witherspoons gives away the Newspaper "City AM") "Santander UK said it had raised £2.25bn through a residential mortgage backed securitisation deal.... ............................the UK arm of the Spanish bank has raised £5.25bn via asset backed deals so far this year................the first AA rated issuance by a UK institution, since before the financial crisis was announced, came just hours before the branch had its credit rating slashed by Moody's"

    I think this translates into "We have flogged off the right to receive the interest on mortgages for a lump sum NOW"

    Meanwhile since the 2008 global melt down, Santander seems to have gone from strength to strength in South America and its subsidiaries in Brazil and Chile have been partially sold to (local?) investors.

    The group as a whole is presenting a soggy share price, the market is expecting a cut in the dividend or to be "milked" by a rights issue (probably both); and the provision for bad debts on Spanish Mortgages is looking a bit slim.

    http://www.dailyfinance.com/2012/05/07/banco-santander-strengths-weaknesses-opportunitie/

    So it looks like Santander has a war chest available now and more on call if needed BUT what is it intending to do if push comes to shove? It is not the Spanish "Halifax" but it could be the Spanish "Lloyds", if it makes the wrong choices.
  • jamesdjamesd Forumite
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    I know savings are safe but will the Santander Investment ISAs (Guaranteed Growth Plan 9) and the Direct Share Investments (Guaranteed Growth Plan 9) be covered by the FSCS £85,000?
    Not if they are classed as investments instead of deposits. The investment limit is £50,000, not £85,000. Santander should be able to tell you which limit applies.
  • The_EconomistThe_Economist Forumite
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    Sorry to be pedantic

    No need to be sorry. We realy do need full clarity on facts and figures on the british banking regs if things go south. We need reasurance if things go wrong.
    If i could i would, but i cannot so i wont, but maybe one day i will.
  • John_PierpointJohn_Pierpoint Forumite
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    Anyone worrying about Barclays? Said to be more exposed to Spain and its negative equity housing market?
  • jamesdjamesd Forumite
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    Is it not a fact that we barely know anything about this company's vulnerability or intentions other than what it chooses to let us know?
    It is a fact that we can expect all interested parties, including central banks, to be as silent as possible about the banks that are in potential trouble until it's necessary to intervene, if that ever happens. This isn't a reason for added concern because of the protection that exists for consumers and small businesses. And also because of the tools for intervention that are now available. Larger businesses should be paying attention to credit ratings and professional advisers because they don't get the industrial grade protection that consumers and small businesses get.
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