Fears over safety net (Icesave)

Meltdown_2

chesky369 wrote: »

Either that, or it may be the anti-whaling lobby.

Or the Anti-West Ham United lobby ...;)

Fella

Personally I think it's important to distinguish between possible scaremongering & pertinent information.

The direct references to Icesave or Icelandic banks may be scaremongering. However the detail on how the FSCS works is not scaremongering - it's simply information - & is definitely (yet) another factor to be considered when deciding where to bank.

Whether Icelandic banks are risky is (at least to some extent) a matter of opinion. However, the fact that the FSCS works differently for non-UK banks seems to be fact, not opinion. And in my case, it was a fact I wasn't aware of.

mroller

GDP/capita in Iceland is higher than in the UK (40k$ vs 35k$), they have an unemployment rate of 1% instead of 6% in the UK.

I kinda have the feeling that it's Icelandics who should be worried of saving with a British bank and not the other way around. (anyone remembers NR?)

Meltdown_2

Fella wrote: »

Personally I think it's important to distinguish between possible scaremongering & pertinent information.

I fully agree with that.

Fella wrote: »

However, the fact that the FSCS works differently for non-UK banks seems to be fact, not opinion.

But how can we be sure what is, and what is not, a "non-UK" bank?
Is Hong Kong and Shanghai Banking Corporation (sorry, HSBC) a non-UK bank?
Citibank? Egg?
If a foreign bank forms a UK subsidiary, can that subsidiary be a "UK bank"?
How do we find out this sort of information?

I had thought that if it was authorised by the FSA (with registration number, etc) then it was classed as UK for the purposes of FSCS. Apparently not ...

Jonbvn

Fella wrote: »

However, the fact that the FSCS works differently for non-UK banks seems to be fact, not opinion. And in my case, it was a fact I wasn't aware of.

I think this is the crux of the matter. I wonder how it would apply to the Nigerian bank (in the UK) that was a recent topic of debate?

tradetime

Meltdown wrote: »

I fully agree with that.



But how can we be sure what is, and what is not, a "non-UK" bank?
Is Hong Kong and Shanghai Banking Corporation (sorry, HSBC) a non-UK bank?
Citibank? Egg?
If a foreign bank forms a UK subsidiary, can that subsidiary be a "UK bank"?
How do we find out this sort of information?

I had thought that if it was authorised by the FSA (with registration number, etc) then it was classed as UK for the purposes of FSCS. Apparently not ...

It's an interesting point, an opens the door for a lot of speculation that really needs clarifying.
HSBC is headquartered in the UK ....I think....at least it's entry in Forbes lists it as a UK bank.
Citi obviously is a US bank, but I'm not sure where that leaves Egg.

tradetime

Meltdown wrote: »

There is another article in today's Sunday Times (available via Times Online) entitled "Time to bale out of Iceland?" by the same person (Elizabeth Colman).

That article covers both Icesave/Landsbanki and Kaupthing - indeed it states "Admittedly, most of the concern about Iceland centres on Kaupthing, the country's largest bank". (an aside: Is Glitnir no longer the largest?)

It also mentions that the average balance in an Icesave easy-access account is £38,000, though some have as much as £1M with the bank.

The article closes with an interesting quote by Sue Hannums of AWD Chase de Vere. "We are happy to recommend any bank that can guarantee savers' deposits. However we would not recommend savers invest any more than £35,000 in each account. This applies to UK banks as well."

:eek:

Haven't read that article, but I do know that a lot of the "bailing out" of Iceland stuff is financial market related, in the Icelandic stock market has had a very steep appreciation, alos I think it has featured quite highly in the Yen carry trade. Seemingly quite a few fund managers and investment houses feel the Investment potential has piqued and they have withdrawn funds, whether that should be cause for concern on the health of their banks I do not know. Kaupthing bank is quite a large bank with opeations in 10+ countries and is the seventh largest bank in the Nordic countries. Of course size doesn't make it immune to anything, but it is worth considering in context when people talk about these "small foreign banks" it would be considerably smaller than HSBC et al, but it is still a large organisation with a fairly diversified income stream, financially speaking

Lavendyr

Fella wrote: »

Personally I think it's important to distinguish between possible scaremongering & pertinent information.

The direct references to Icesave or Icelandic banks may be scaremongering. However the detail on how the FSCS works is not scaremongering - it's simply information - & is definitely (yet) another factor to be considered when deciding where to bank.

I totally agree, but I don't understand why there's any need to focu on Icesave in particular. If it's because more Britons have deposited with them than any other foreign bank, that should be given as the reason for focusing on them in the article - otherwise it seems to make out that Icesave is riskier than Kaupthing, ICICI, First Bank of Nigeria and ING, among other foreign banks.

Fella wrote: »

Whether Icelandic banks are risky is (at least to some extent) a matter of opinion. However, the fact that the FSCS works differently for non-UK banks seems to be fact, not opinion. And in my case, it was a fact I wasn't aware of.

When I applied for my deposit account with Icesave I read that they were covered not only by the FSCS but also by the Icelandic national deposit guarantee (up to €20k or so), and if anything that made me feel my deposits were more secure, not less, since they were to be covered by two guarantees. I assumed that this meant that they would between them make up the funds guaranteed to me - ie. that the first €20k would be made up from the Icelandic guarantee and the remainder, if any, by the FSCS. I thought then that sorting that out might take a while.

And as far as I understand it, that's all the article is saying. I realise that there may be a delay in claiming money back but that's all - OK, lost interest, but it doesn't mean that I won't get my money back - it may just take a bit longer. It may not - we don't know and can't know until it happens. And I'm not sure why the article implies it could be more likely to happen to Icesave/Landsbanki than to any other foreign bank.

In essence I'm in full agreement with you Fella and I'd rather have an idea of the issues involved, but I do think that this article is an example of irresponsible reporting since it singles out one of many banks in the same situation without any apparent explanation, thereby implying that the risk for that bank is higher than any other. And if that's actually the case, they should explain it, because I for one would have a vested interest in knowing.

masonic

Fella wrote: »

So where would that leave savers if, for example, the home state scheme was bankrupt? It's not beyond the realms of imagination to envisage protracted legal wrangling etc etc. And our Govt would not have the same motivation to help savers with a foreign bank that they had to bail out NRK.

It's had to believe the Icelandic scheme would fail in the same way as it's hard to believe the UK scheme would fail. Call me cynical, but if the Icelandic scheme was underfunded, something tells me the media would have pointed that fact out very clearly. After all the excitement about Moody's warning that they were thinking of reducing the Icelandic banks' credit ratings, the main reason they didn't do so is that they had confidence in the Icelandic goverment being able to step in and compensate any losses.

planemad

ICESAVE say: Icesave insists its business is healthy. Mark Sismey-Durrant, managing director, said: “Icesave is hugely liquid. A number of banks across Europe would die for the kind of funding that we’ve got. Moody’s announcement was frustrating � a lot of banks are on watch, not just the Icelandic banks. It’s a function of the global economy.”