Goldman Sachs MARCUS savings account

carlh93sky.com

Two concerns:-

1. Not available as a joint account. Martin runs with the crowd in not showing whether or not this facility is available on savings accounts. I had to waste time applying in my name, only to find, at the end, that there was no progression to add a joint account holder's details. Could not clarify first by phone as they are open ONLY WEEKDAYS. Martin: please say if accounts are available to joint holders (an important consideration), as well as stating if individual savings institutions fully support the UK Faster Payments Scheme (two firsts if you do both!).

2. 90% of the Marcus interest rate is variable basic, with only 10% fixed (presumably) 12-month bonus. You need to watch the rate regularly because a small reduction makes a much larger difference to the total rate than with an account where the variable rate component is 50% or less.

3.This is a very high rate for this sort of account in the present climate. I remember all too well the scandal of the Icelandic banks. They suddenly swamped the "soft" UK savings market with unmatchably high rates. Owing to their very high exposure to that massive and highly speculative Icelandic retailer-acquirer Baughur, they could no longer raise funds on the international money market. So they had turned to the soft UK (and Dutch) savings market for a quick fix. They got this, but Baughur failed, and the banks which were so heavily exposed to it also failed (sorry if I've misspelt the defunct firm's name).

So those banks reneged on their debts to the UK and Dutch savers who had "invested" in them. In the UK, the accounts, though issued by UK branches of the Icelandic banks, were NOT protected by what is now called the FSCS insurance, so account holders were theoretically left high and dry. In the event, the BoE decided to bail out UK account holders.

UK Treasury never got the bail-out money back from Iceland. The parliament there voted down our request!

So, being suspicious due to past experience, I ask why Goldman Sachs have suddenly launched this unbeatable interest rate into a hungry and unsuspicious market. Can we trust that we are not into an impending re-run of the Icelandic melt-down? OK, the FSCS guarantee applies in this case, but would the BoE actually be able to bail out millions of savings account holders if there was a re-run of Iceland?

RG2015

Is this a wind up?

1.50% a very high rate for this type of account?
Goldman Sachs possibly going out of business?

I could go on but I have already lost the will.

carlh93sky.com

Highest rate currently for this type of account is 1.36, with more of the rate as unvariable bonus. Ignoring this qualitative, but significant, difference, Marcus rate is 10.29% higher than "normal". To me, that percentage makes their rate qualify as "much higher".It's certainly in the loss-leader category, but con't be a ploy to entice you into a current account, as they don't offer these to personal customers, do they?

If I fear a possible parallel between the Icelandic banks debacle and what GS are offering as a savings rate I should say so. Hopefully I'm wrong, and, even if I am right, hopefully the fall-out would not be too great for the BoE to stomach. I respect your right to take a different view from what from my suspicious nature inclines me to, but did you live through the Icelandic debacle, and its shameful outcome, as a saver?

ColdIron

Marcus is protected by the FSCS so just as safe as Barclays or Lloyds and not comparable to the Icelandic banks
https://www.marcus.co.uk/uk/en/public-site/legal-information

RG2015

I cannot recall the exact figures but weren't the pre-crash Iceland banks offering eye-watering interest rates for easy access savings accounts?

I do recall thinking at the time (after the crash) that if a rate looks to good to be true that it probably comes with some major (hidden) concerns. I just do not see this with the Marcus savings account.

I am more inclined to suspect that the high rate will not last. A bit like Ulster Bank last year.

jamei305

carlh93sky.com wrote: »

Highest rate currently for this type of account is 1.36, with more of the rate as unvariable bonus. Ignoring this qualitative, but significant, difference, Marcus rate is 10.29% higher than "normal". To me, that percentage makes their rate qualify as "much higher".It's certainly in the loss-leader category, but con't be a ploy to entice you into a current account, as they don't offer these to personal customers, do they?

If I fear a possible parallel between the Icelandic banks debacle and what GS are offering as a savings rate I should say so. Hopefully I'm wrong, and, even if I am right, hopefully the fall-out would not be too great for the BoE to stomach. I respect your right to take a different view from what from my suspicious nature inclines me to, but did you live through the Icelandic debacle, and its shameful outcome, as a saver?

It's part of a long term massive investment into broadening their business along the lines of other banks such of Bank of America and HSBC. They already offer loans in the US and have said they plan to do the same here.

Your fears seem to be based solely on their high interest rate, but major new entrants to a savings market typically offer high rates. That the Icelandic banks did so and then collapsed is not relevant.

You may as well say "British Airways are offering cheap flights on a new direct route to Nashville - they must be about to go bust!"

soulsaver

It isn't out of step on interest rates - you can get higher all over the place between reg savers & current ac and short term fixes.

You could even beat 1.5% on an easy access saver ac if you were quick a short time ago (August)..

What is impressive for me is it's without hoops..

Uxb

All the UK domestic retail savers in Icesave were fully compensated by the UK government even those who had more than the FSCS limit in them.
Kaupthing Edge being the other Icelandic one was closed down by direct order by the UK government using anti-terrorism legislation against UK citizens as the legal mechanism a few days after Icesave collapsed and the UK government arranged (ie paid for) ING Direct to to take over the liability to pay savers: so KE savers got ING accounts in exchange with their funds now with ING rather than the FSCS having to pay out in one hit as they did with Icesave.
No one lost any money, unlike various councils who had commercial deposits with the Icelandic banks and these of course were not covered.

The two Icelandic banks were in any case not offering a very significant increase in interest over UK institutions at the time. I dimly recall it was say 0.5% more when savings rates were around 6% generally.

The OP is correct in the strange way Landisbankii structured the UK operations tradenamed as Icesave as branch of the parent. They also owned Heritable Bank which collapsed on the same day - though that was not involved in retail operations
the UK Gov was fully compensated in 2016 by Iceland for its costs in loaning the FSCS money to pay out savers.

At the same time Bradford and Bingley building society collapsed and in the same way as with KE was compulsorily taken over by Santander rather than the FSCS having to pay out direct.

RG2015

carlh93sky.com wrote: »

If I fear a possible parallel between the Icelandic banks debacle and what GS are offering as a savings rate I should say so. Hopefully I'm wrong, and, even if I am right, hopefully the fall-out would not be too great for the BoE to stomach. I respect your right to take a different view from what from my suspicious nature inclines me to, but did you live through the Icelandic debacle, and its shameful outcome, as a saver?

The FSCS will guarantee savings up to the current limit of £85,000 so it is irrelevant what the BoE can stomach.

Surely the shameful outcome only applied to savers who allowed their greed to outweigh their common sense.

However, I do believe that it was shameful that local authorities recklessly invested public money without adequate due diligence.

Alexland

RG2015 wrote: »

Goldman Sachs possibly going out of business?

I remember thinking that about Lehman Brothers when they came to our university to present and interview us. They gave us loads of wine one evening but thankfully I chose to go with a different graduate employer. Still there's FSCS protection, etc.

Alex

25_Years_On

carlh93sky.com wrote: »

but did you live through the Icelandic debacle, and its shameful outcome, as a saver?

Not many didn't. Not many under elevens use these forums. What was the shameful outcome? Savers got their money back.