Bank bail ins are coming to the UK

Rich2808

Mistermeaner wrote: »

Bank with your mortgage provider. Quid pro quo

Unless there is a debt jubilee they will still make you pay the mortgage - even if it's transferred to another bank or the state.

People mistakenly assume governments now own banks - as 2008 showed the banks actually own the government. The only businesses the government will never allow to fail.

danothy

berbastrike wrote: »

I have £75k in a few accounts. ... I think some banks will take 50% of deposits over £75k.

So ... none of yours then?

berbastrike wrote: »

I am scared ...I would honestly commit suicide if the banks take most of my money

Do you have a similar attitude to other things that might be out of your control, like nuclear war, flooding, asteroid impact etc., disrupting your life stability? If so, why fixate on the financial meltdown scenario? If not, why not?

PasturesNew

berbastrike wrote: »

If it left with me no money? Money that I had worked for, paid tax on and put away for security. It would honestly make me want to give up

How'd you feel if, on your way up you met a long-lost relative that said "What're you doing here you fool? I just died and left you everything! Why didn't you wait?"

Generali

Mistermeaner wrote: »

Bank with your mortgage provider. Quid pro quo

Doesn't work like that.

If you have savings with a bank that goes bust you are a senior creditor. If you owe money to a bank that goes bust you remain in the same position as previously.

One thing that was impressed on me early in my career is that if you have a contract with another bank and the bank goes bust then if the contract you have with them is in profit they will not pay but if it is in loss then the receiver will make you pay.

It doesn't sound fair but it is how it works and you can bet that this crap has been tested to breaking point in the courts.

kabayiri

Generali wrote: »

Doesn't work like that.

If you have savings with a bank that goes bust you are a senior creditor. If you owe money to a bank that goes bust you remain in the same position as previously.

One thing that was impressed on me early in my career is that if you have a contract with another bank and the bank goes bust then if the contract you have with them is in profit they will not pay but if it is in loss then the receiver will make you pay.

It doesn't sound fair but it is how it works and you can bet that this crap has been tested to breaking point in the courts.

Interesting. A scenario.

Does this mean that if you have an offset mortgage account with bank X for £100K, and a deposit account for £100K, then if the bust scenario occurs you lose your £100K but are still liable for the mortgage account?

(ignore the 75K guarantee, assume other accounts cover that)

Generali

kabayiri wrote: »

Interesting. A scenario.

Does this mean that if you have an offset mortgage account with bank X for £100K, and a deposit account for £100K, then if the bust scenario occurs you lose your £100K but are still liable for the mortgage account?

(ignore the 75K guarantee, assume other accounts cover that)

It would depend on exactly how the accounts are defined in the contract.

If the mortgage is a line of credit then you owe a net amount. In that case it works in the same way as a credit card you've partly paid off. The liquidator wouldn't expect you to pay the full amount of your credit limit while standing in line with the unsecured creditors for the amount you'd paid off already.

If the account is set up in the contract as a savings account and a loan then there is a distinct risk that you lose your savings (beyond what can be recovered under FCS and as an unsecured creditor) and owe the whole of the debt.

When looking at what is 'fair', don't forget that the liquidator is paid by creditors and her job is to get as much money for them as possible.

wotsthat

I'd always considered savings in an offset account to be safe because they're a reduction in mortgage balance.

If the bank goes bust and your mortgage of £100k was offset by £100k then net you owe the bank nothing and vice versa.

The biggest drama might be the loss of the £100k credit line.

kabayiri

wotsthat wrote: »

I'd always considered savings in an offset account to be safe because they're a reduction in mortgage balance.

If the bank goes bust and your mortgage of £100k was offset by £100k then net you owe the bank nothing and vice versa.

The biggest drama might be the loss of the £100k credit line.

I'm not going to assume this. I am going to ask the bank.

Generali

kabayiri wrote: »

I'm not going to assume this. I am going to ask the bank.

Depending on how much you have in the offset side of the savings account you might want to push your due diligence a bit deeper than 'asking some bloke that answered the phone'.

TBH I don't know how you'd do that. I know how I'd do it but I don't know how someone else could at reasonable cost. Reading the contract might be a start. Bear in mind that Lloyds got to redeem a bunch of bonds recently at below face value because they made a mistake when telling investors the terms.....in the prospectus..and in the summary of the prospectus....and it just so happened that the error was massive advantageous to them. I.e. the contract wasn't what was written it was what the bank wanted it to be.

kabayiri

Generali wrote: »

Depending on how much you have in the offset side of the savings account you might want to push your due diligence a bit deeper than 'asking some bloke that answered the phone'.
...

Give me some credit !!

(I was going to ask 'some bloke' over the counter)

...or girl...or automated teller assistant droid.