So if the best rates aren't 'safe' what's the next best?

fisher-man_2

I have recently sold some property and have a quite sizeable sum to put away somewhere and use the interest for monthly income.
I have spent a lot of time here and on other sites checking rates and T&C's etc and was/am quite happy to put a large chunk of it with Icesave (probably in a 1 year bond) despite all the doom and gloom predictors saying be careful of them, my mind was put a bit more at rest after reading this link. http://www.housepricecrash.co.uk/forum/index.php?showtopic=59968
Which suggests to me they are pretty safe, especially seeing as they appear to have no exposure to the sub prime thing. Their recent rate drop also suggests to me they are not that desperate for funds.

I had already decided to limit my exposure on the whole amount by spreading the money between several top paying accounts and go to the joint limit of 70k in each with perhaps more in the Icesave one year bond as it pays good interest with monthly paid away interest, a main requirement for me and the options are surprisingly few for that.

Guess what? all my other selections are said to be iffy too, B&B, Kaupthing et al. I know NR are pretty safe with the current HMG guarantee but that could be temporary.

So who are the safe players in the savings market? is it as cut and dried as safety = low interest?

tradetime

my mind was put a bit more at rest after reading this link. http://www.housepricecrash.co.uk/for...howtopic=59968

There is a later report here for the full year financial report, which basically continues much in the same vane as that one.

So who are the safe players in the savings market? is it as cut and dried as safety = low interest?

Whether or not unusually high rates are indicative of a bank in need of funds or not, it would be foolish to assume that low rates = safe.
Low rates may suggest that the bank has more than adequate funds available for ongoing operations for the time being, but whilst high rates may indicate a bank in need of funds, it may also just highlight a bank that is preparing itself in advance for the next wave of liquidity problems to hit the markets. I think there is still a lot of writedowns to come yet as CDO's and SIV's play out. I just hope the risk of CDS's is overstated as they dwarf the other two classes. Bottom line is, there's no way to know who's safe, the smaller they are, the more risk they are from general liquidity probs, the biiger they are, the more likely they are to have large exposure to the commercial paper market.

tawse57

I have read reports that HSBC and Lloyds are supposedly safe because they loan out less compared to how much they have in deposits. I think HSBC loans out 97p for every £1 in savings it has but, worringly for me, I have no idea about all this CDO, SIV stuff and I would assume that the likes of HSBC and LLoyds would have more exposure to this subprime than less global banks.

I have read that Nationwide is considered one of the safest and I currently have more than 35K in it BUT... I do not feel safe about that. Problem is, spreading the money arounds means I have to consider either very poor interest payers - LLooyds/HSBC - or those banks considered very much at risk such as B&B. These are worrying times for any savers.

Aegis

tawse57 wrote: »

I have read reports that HSBC and Lloyds are supposedly safe because they loan out less compared to how much they have in deposits. I think HSBC loans out 97p for every £1 in savings it has but, worringly for me, I have no idea about all this CDO, SIV stuff and I would assume that the likes of HSBC and LLoyds would have more exposure to this subprime than less global banks.

I have read that Nationwide is considered one of the safest and I currently have more than 35K in it BUT... I do not feel safe about that. Problem is, spreading the money arounds means I have to consider either very poor interest payers - LLooyds/HSBC - or those banks considered very much at risk such as B&B. These are worrying times for any savers.

Lloyds actually has remarkably low exposure to subprime loans compared with almost any other UK bank.

They just don't seem to be all that competitive with their rates...

tawse57

Northern Rock is about to be nationalised - probably the safest UK bank now as it is backed up by every single one of us via our taxes! Doh!

tradetime

tawse57 wrote: »

Northern Rock is about to be nationalised - probably the safest UK bank now as it is backed up by every single one of us via our taxes! Doh!

LOL, already have one of those, it's called the NS&I.

bryanb

I read somewhere that the government are only guaranteeing Northern rock accounts that were open on 19th Sept or reopened after that date. Anyone got any further info? Or did I dream it ?

tradetime

bryanb wrote: »

I read somewhere that the government are only guaranteeing Northern rock accounts that were open on 19th Sept or reopened after that date. Anyone got any further info? Or did I dream it ?

The terms of the government guarantee are there on their site.
http://www.northernrock.co.uk/savings/

and at HM Treasury

bryanb

Had a quick look, that's OK then ! Thanks