Banks with lowest/highest bankruptcy and collapse risk

qwerty1066

Hi all,

Does anyone know which UK banks are the most/least exposed to credit risk which could turn into sudden gigantic losses (and break the bank)? HSBC?

The government protects savers’ deposits up to a certain amount but if my bank collapses my funds might be frozen for a few weeks in the turmoil. Worst case, the UK banking system will become a new Cyprus and the account holders will not get all of their money back.

I’m currently a customer with HSBC. A few weeks ago I needed a banker’s draft for around £10,000 and went to the branch to order it. To my utter surprise, they demanded that I show proof that I was actually buying something from the company I wanted the draft issued to. I asked why and they said that this was a new “fraud prevention rule” that had just been put in place.

For me, this is huge red flag which indicates that something is very wrong with HSBC and that they’re trying to prevent a run on the bank. BBC and others reported about this in January. Other news sources have reported about suspected gigantic losses in China. Google for “HSBC collapse” for more information.

I want to switch banks. Which? magazine gave First Direct top ratings but they are owned by HSBC. I don’t know if FD really is separate from HSBC or if a collapse of HSBC would drag them down as well.

I’m looking for a bank with low/reasonable charges and fees and good customer service. Preferably with a branch network, though that is not necessary.

But most importantly, no fancy international expansion, no aggressive investment banking, no empire building CEO. What are the banks to avoid if I want a low risk bank?

InsideInsurance

Could be counter money laundering or fraud. Cant remember even the last time I heard of anyone asking for a bankers draft.

http://www.bankofengland.co.uk/publications/Documents/news/2013/pracaprec.pdf

As you will see, HSBC are one of the best capitalised banks according to the BoE

meer53

HSBC's fraud prevention rules are now in place due to the huge penalties they were given for dealing with Mexican Drug Cartels !

Hardly a red flag.

le_loup

HSBC? Red flag? Are you from a competitor bank?

p00hsticks

qwerty1066 wrote: »

I’m looking for a bank with low/reasonable charges and fees and good customer service. Preferably with a branch network, though that is not necessary.

But most importantly, no fancy international expansion, no aggressive investment banking, no empire building CEO. What are the banks to avoid if I want a low risk bank?

Sounds to me like you're looking for a building sociey rather than a bank ....

dr_adidas01

Its nothing new they have been doing this for a while now, its called security yes it can be annoying but its better to be safe than sorry.

We had it recently when buying a new car via visa debit card, we told the bank the dealer and the amount we would be paying before going and paying for it.

The dealer still had to ring the bank and get authorisation, I had to speak to them and confirm some details and the dealer was given an authorisation code and the payment went through.

PeacefulWaters

qwerty1066 wrote: »

Hi all,

Does anyone know which UK banks are the most/least exposed to credit risk which could turn into sudden gigantic losses (and break the bank)? HSBC?

The government protects savers’ deposits up to a certain amount but if my bank collapses my funds might be frozen for a few weeks in the turmoil. Worst case, the UK banking system will become a new Cyprus and the account holders will not get all of their money back.

I’m currently a customer with HSBC. A few weeks ago I needed a banker’s draft for around £10,000 and went to the branch to order it. To my utter surprise, they demanded that I show proof that I was actually buying something from the company I wanted the draft issued to. I asked why and they said that this was a new “fraud prevention rule” that had just been put in place.

For me, this is huge red flag which indicates that something is very wrong with HSBC and that they’re trying to prevent a run on the bank. BBC and others reported about this in January. Other news sources have reported about suspected gigantic losses in China. Google for “HSBC collapse” for more information.

I want to switch banks. Which? magazine gave First Direct top ratings but they are owned by HSBC. I don’t know if FD really is separate from HSBC or if a collapse of HSBC would drag them down as well.

I’m looking for a bank with low/reasonable charges and fees and good customer service. Preferably with a branch network, though that is not necessary.

But most importantly, no fancy international expansion, no aggressive investment banking, no empire building CEO. What are the banks to avoid if I want a low risk bank?

Politely, your paranoia is unhealthy.

HSBCs withdrawal procedures appear to be nothing more than an over-reaction to money laundering regulations.

Their loan to deposit ratio is below 100% so they are not reliant on wholesale funding. They are well capitalised, which means they have a good buffer if it hits the fan.

While I don't particularly like HSBC there is nothing to suggest any difficulties.

The FSCS believe that they are in a position to return savers' money to them within seven days of any bank collapse in the UK.

Calm down dear.

pmduk

Just ensure your balance never goes above the £85,000, FSCS compensation level and you'll be safe.

agrinnall

See also https://forums.moneysavingexpert.com/discussion/4872338

qwerty1066

Any suggestions for banks with low risk exposure (or a list of the most/least indebted UK banks and building societies)?

Will First Direct be dragged down as well if HSBC collapses?

Thanks for the help,
I don’t think I am being paranoid. The Telegraph ran an article three days ago about the potential risk exposure for HSBC and Standard Chartered about a possible Chinese property crash (“UK banks asked: could you weather an Asia crash?”)

This is what happened a few weeks ago. Before heading for the HSBC branch and ordering a banker’s draft I had tried to pay for my £10,000 purchase in the shop with my HSBC debit card. When the transaction was rejected it went to authorisation. I had made a similar £10,000 purchase in 2012 with the same HSBC card so I expected that I’d have to answer a few security questions and then have the transaction cleared. This time HSBC completely rejected the transaction. Even after a long discussion with some script- reading customer representative with broken English they claimed that their automatic security checks had blocked the transaction and that it was impossible to manually override it. This is yet another red flag for me (in addition to their bizarre restrictions on the banker’s draft). Now I am looking for another bank.

meer53

qwerty1066 wrote: »

Any suggestions for banks with low risk exposure (or a list of the most/least indebted UK banks and building societies)?

Will First Direct be dragged down as well if HSBC collapses?

Thanks for the help,
I don’t think I am being paranoid. The Telegraph ran an article three days ago about the potential risk exposure for HSBC and Standard Chartered about a possible Chinese property crash (“UK banks asked: could you weather an Asia crash?”)

This is what happened a few weeks ago. Before heading for the HSBC branch and ordering a banker’s draft I had tried to pay for my £10,000 purchase in the shop with my HSBC debit card. When the transaction was rejected it went to authorisation. I had made a similar £10,000 purchase in 2012 with the same HSBC card so I expected that I’d have to answer a few security questions and then have the transaction cleared. This time HSBC completely rejected the transaction. Even after a long discussion with some script- reading customer representative with broken English they claimed that their automatic security checks had blocked the transaction and that it was impossible to manually override it. This is yet another red flag for me (in addition to their bizarre restrictions on the banker’s draft). Now I am looking for another bank.

Definitely paranoid.

Why are fraud checks bizarre ?