kathhaley

kathhaley

I recently read that the G20 met and now have passed laws that allow all deposits to be confiscated if a bank fails. The current £85.000 guarantee that the UK Govt offers would only cover a minute (.008% or so). Are people aware of this? Only public banks that are independent are safe apparently, not that I can find one here.

Uxb

the £85K covers the vast majority of domestic/retail personal deposits by individuals
You are correct that the vast majority of total deposits are those from corporate depositors.
The safety net of £85K is only intended to cover personal deposits and those of small business up to a certain size.

There is no "confiscation" involved IF such a bank failure took place.
It is simply like you lending money to another person(bank in this case) who then lends it out elsewhere and looses it all though bad investments or business failures.
So there is no longer the money there to pay you back - even though your papers may say you have lent them money and are due to have it returned.
So either you the depositor has to take the loss or someone else (taxpayers in banks cases so far) have to make up the difference to enable to bank to pay you back.
I repeat is it not confiscation if such an event happened: the money would simply not exist anymore.

In practice if a major clearing bank in the UK went bust, what with credit cards/ATMs not working, fuel stations closed, no more food in the supermarkets because no suppliers could get paid, and effectively no police force I think that the fate of your £85K would be the least of your worries.

agrinnall

kathhaley wrote: »

I recently read that the G20 met and now have passed laws that allow all deposits to be confiscated if a bank fails. The current £85.000 guarantee that the UK Govt offers would only cover a minute (.008% or so). Are people aware of this? Only public banks that are independent are safe apparently, not that I can find one here.

Nations pass laws, not the G20.

I suspect that the UK example of the public banks you mention would include National Savings and Investments (where the Treasury guarantees deposits up to £2 million) and NRAM which was fully nationalised when Northern Rock failed (although I'm not sure whether they hold customer deposits anyway) - in both cases the government is the ultimate backer, so even if the institution failed deposits would be safe unless the country became broke.

PeacefulWaters

kathhaley wrote: »

I recently read that the G20 met and now have passed laws that allow all deposits to be confiscated if a bank fails.

Don't believe everything you read.

The current £85.000 guarantee that the UK Govt offers would only cover a minute (.008% or so).

% of what?

Around 70% of the amount deposited in deposits in the UK is protected. Around 98% of individuals depositing are wholly protected.

Are people aware of this? Only public banks that are independent are safe apparently, not that I can find one here.

What are you going on about?

Archi_Bald

What the G20 agreed on is that they want to do away with the "too big to fail" threat. This is brilliant news for the world at large, and it doesn't change anything about the £85K protection (per financial institution) individual UK depositors are enjoying.

http://www.reuters.com/article/2014/11/10/us-g20-banks-regulations-idUSKCN0IU0E920141110

kathhaley wrote: »

Only public banks that are independent are safe apparently

No idea what that means but suffice to say: any UK bank and building society that is part of the FSCS scheme is "safe" as far as private depositors are concerned, as long as the depositors stick to the rules defined by FSCS.