Santander and Tesco (Bank)

scoot65

With regard to the forthcoming Scottish referendum, are Santander and Tesco Bank financially linked to Scotland?

I need a couple of current accounts and would rather my money by covered by financial protection.

Archi_Bald

They are both licensed and regulated by the UK PRA/FCA, and offer the UK FSCS protection.

Santander UKs registered offices are in London. Tesco Bank's registered offices are in Edinburgh.

Even if there were a yes vote, this will not change for a considerable time as it would take ages for companies to decide what this means to them.

pmduk

Surely, unless Scotland left the EU they would need to retain some type of compensation scheme, at a level similar to FSCS?

colsten

They certainly would have to and I heard them saying they would copy the FCA/PRA/FSCS one to one, anyway.

But that means not a lot as you would have your money guaranteed under a foreign investment scheme. This is know as a passport scheme http://www.moneysavingexpert.com/savings/safe-savings

When Iceland went bankrupt, their passport scheme wasn't worth the paper it was written on as they flatly refused to pay a penny to any non-icelandic citizens.

pmduk

The major drawback to that I understand is that passport scheme claims can be a lot slower to pay out. NB this isn't from personal experience, but there have been comments on here previously from those who experienced it.

colsten

pmduk wrote: »

The major drawback to that I understand is that passport scheme claims can be a lot slower to pay out.

...or never, as was the case with the icelandic collapse.

All private UK customers did get their money back - but it was an extraordinary move by Alistair Darling and Gordon Brown, not the icelandic scheme, that funded the return of the funds. Waiting for the money was not an experience I would ever like to repeat.

I also wouldn't expect that any Government could afford to be so generous again in similar circumstances as we have since lived through a financial crisis, and have all been made aware of the limitations of the guarantees.

Thrugelmir

pmduk wrote: »

Surely, unless Scotland left the EU they would need to retain some type of compensation scheme, at a level similar to FSCS?

Scotland wouldn't be a member state of the EU. It needs to apply and be accepted.

Thrugelmir

colsten wrote: »

When Iceland went bankrupt, their passport scheme wasn't worth the paper it was written on as they flatly refused to pay a penny to any non-icelandic citizens.

With a population of only some 300,000 how would you expect Iceland to foot the bill?

Steve_xx

pmduk wrote: »

Surely, unless Scotland left the EU they would need to retain some type of compensation scheme, at a level similar to FSCS?

As I understand it thus far, if Scotland votes for independence it will not have the option to stay in the EU. It will have to apply for membership afresh. Thereby leaving the question of the compensation scheme in a grey area!

colsten

Thrugelmir wrote: »

With a population of only some 300,000 how would you expect Iceland to foot the bill?

You can ask a similar Q about Scotland, and for a lot better reason. The size of the financial services sector in Iceland was 7 times GDP. In Scotland, it would be 12 times the size of GDP. These are extreme multiples. Not even Switzerland, a bastion of banks, has a banking sector more than 4 times its GDP.

http://www.economicsinpictures.com/2013/08/banking-sector-percentage-of-gdp-across.html

If I remember correctly, Cyprus had a financial services sector of 8 times its GDP when that sector collapsed.

colsten

Thrugelmir wrote: »

Scotland wouldn't be a member state of the EU. It needs to apply and be accepted.

Steve_xx wrote: »

As I understand it thus far, if Scotland votes for independence it will not have the option to stay in the EU. It will have to apply for membership afresh. Thereby leaving the question of the compensation scheme in a grey area!

I agree there is no chance that Scotland can be an EU member without applying for membership but EU membership is not a pre-requisite for an FSCS-type scheme. The only question is whether the scheme is worth anything when disaster strikes.