MSE News: EU deal spares small savers in Cyprus from bailout tax

Reaper

The_Green_Man wrote: »

So when Northern Rock effectively failed on 22nd Feb 2008 (this is the date it was nationalised after 2 failed takeover bids), then the depositors would have received 100% of the first £35k.

In theory yes but in practice no. See my post number 47.
Now that people are aware of the limits I would expect the government to only compensate up to £85k from now on.

arcadia00

I thought the gist of one part of the EFTA court ruling on Icesave was that sovereigns have no responsibility to underwrite deposit insurance schemes whether for domestic or foreign owned deposits.

Reaper

arcadia00 wrote: »

I thought the gist of one part of the EFTA court ruling on Icesave was that sovereigns have no responsibility to underwrite deposit insurance schemes whether for domestic or foreign owned deposits.

They did indeed, which means you should no longer trust any bank making use of the "passport exemption" scheme. Not surprisingly they have been vanishing fast. Though the EU has been changing the rules so the court said the judgement was not valid for cases after 2009.

I found it an odd judgement. I wonder if the fact 1 of the 3 judges was from Iceland made any difference?

talexuser

Reaper wrote: »

Here you go:
http://www.fscs.org.uk/what-we-cover/eligibility-rules/compensation-limits/deposit-limits/
Past cover levels:

Looking back over time it seems to me the increase in limits seems just a tiny bit suspicious - if the system could only guarantee part of your 35K then. could it really guarantee all of your 85k now, or is it all just a veil to instil confidence in a bust system of fiat money? The Cyprus proposal was not a good omen, and the tardiness in actually doing anything to ringfence the banks does not give me confidence.

The_Green_Man_2

talexuser wrote: »

Looking back over time it seems to me the increase in limits seems just a tiny bit suspicious - if the system could only guarantee part of your 35K then. could it really guarantee all of your 85k now, or is it all just a veil to instil confidence in a bust system of fiat money? The Cyprus proposal was not a good omen, and the tardiness in actually doing anything to ringfence the banks does not give me confidence.

Wasn't it raised to be in line with the rest of the EU, who were already covered to the tune of 100,000 euros (approx £85k)?

talexuser

The_Green_Man wrote: »

Wasn't it raised to be in line with the rest of the EU, who were already covered to the tune of 100,000 euros (approx £85k)?

Exactly, not our government decision, but one forced on them by treaty. But before that we had the increase from 35k to 50k as the crisis got worse. Just a tiny bit like panic measures to persuade confidence and prevent runs on banks.