Recession Worries in ICELAND - ICESAVE CUSTOMERS BEWARE

TypeR

See the article here http://www.bloomberg.com/apps/news?pid=10000085&sid=aFGy8DlDdzhg&refer=europe

I'm more then a little concerned about this, Martin has implied in the past that banks "are like bridges" and that they very rarely fail.

Can the resident MSE/Mods on the forum give us an update on how safe they feel investing in ICESAVE really is? I have £73k in them, so double + a bit more then what is protected by the financial ombudsman.

I'm starting to feel a bit uncomfortable after reading that.........

codetown

Thanks for that article. Interesting even if a bit difficult to interpret.
On a first level I would say that banks are in the best position in all conditions (both good and bad times) as they control access to credit in any case.

The article talks about a high level of "debt" (I assume they mean bonds of some kind? What else could it mean?) by some Icelandic banks, such as:
"Landsbanki has 1.1 billion euros ($1.3 billion) in debt that is due this year and 2.0 billion euros due in 2007, it said on March 17. It has current ``liquid assets'' of 3.2 billion euros."

From here to think they will go bankrupt, there is a long long way in my view. I don't know the reference equivalent rate of UK institutions, but I am confident to say that banks have a lot of ways to control problems and measures to apply to reduce their risks before any real worry can raise on their stability itself.

Optimist

You can always move half into ICICI the rate has just gone to 6.06%

moonrakerz

In my 61 years the UK has been through numerous recessions, some major and long lasting. I don't remember many UK banks failing in those times - in fact looking at their profits at the moment I would say they are in pretty good health !

Worry about something more likely - like being struck by lightning.

Compound_2

moonrakerz wrote: »

In my 61 years the UK has been through numerous recessions, some major and long lasting. I don't remember many UK banks failing in those times

BCCI (1991), Barings (1995). In any case, Landsbanki isn't a UK bank.

Chrismaths

BCCI (1991), Barings (1995) - both brought down by fraud, not recessions.

How safe do you want safe to be? I think it is reasonably safe to drive down to the shops. But if I didn't, what's my alternative? I can walk - but then I run the risk of being mowed down by driver/mugged/stabbed etc. Landsbanki going bust is a hugely unlikely event.

Life is full of risk, and there are more realistic ones to worry about than a A rated bank going bust. (BCCI and Barings were never A rated).

Ignore debt figures with banks - they don't mean much. They aren't like widget companies, they are capital managers. When you borrow from barclays or hsbc or the yorkshire building society, the money doesn't come from their profits, it comes from either the deposits of their customers, or the banks borrow it themselves. So debt is a bit (not completely) meaningless in a bank.

GCH888

Noticed the article itself was last updated March 21st 2006 ... so that's over a year old?

Anyway I believe it's always better to spread your savings over different accounts in the event something catastrophic does occur. I've just applied for an ICICI HiSave because apparently it's rate will increase to 6.05% AER.

moonrakerz

Compound wrote: »

BCCI (1991), Barings (1995). In any case, Landsbanki isn't a UK bank.

My point was:- recessions in UK have not brought down any UK banks so why should a recession in Iceland bring down an Icelandic bank ?

meanmachine_2

TypeR wrote: »

Can the resident MSE/Mods on the forum give us an update on how safe they feel investing in ICESAVE really is? I have £73k in them, so double + a bit more then what is protected by the financial ombudsman.

I'm starting to feel a bit uncomfortable after reading that.........

You seem to know about the 30K protection limit, and yet have gone way over that, putting all your eggs into one basket.

Move half the cash into another bank, then you won't have to worry.

What a bizarre post.