How safe are UK Banks?

qwerty007

I agree with all bearish comments here. This bubble is unlike anything that has happened before, and the talk on this post is identical to blogs in the US over a year ago. It is very serious, and if you have savings, or a mortgage, or shares, you have every right to be worried and angry. I personally am not in favour of the calm approach, in the hope that confidence will restore order. This effects everyone, and those that created the mess (and speculators share their part), owe it to us to be transparent about what's on their books.

Whilst I agree that government bailouts may encourage more of the worse, it is the governments job IMHO to ensure a stable environment.

There's probably only a very small percentage of banks that will get into serious difficulty, but the damage that it does is horrendous. It can ruin many peoples lives. My view is that since there is no way of being able to tell for sure if a bank is struggling, follow the smoke. It does seem a little more than coincidental that all the banks (or building societies) that are offering the most competitive rates, are the ones that have attracted negative comments.

Personally, I don't think it is worth the risk of offering the benefit of the doubt to your friendly neighbourhood bank, if your savings are significant. They don't offer you the same courtesy.

The second wave of ARM resets in the US is due in the second half of this year (2008). Alt-A and Option Arms then follow next year. It takes time for defaults and foreclosures to filter through, so this thing is far from over in the US.

I think the best thing that anyone can do is find the most financially secure place for their individual needs, even if it means sacrifices, and sit it out. Unlike stocks, housing bubbles don't burst, so be prepared for the long haul.

Bring it all on, let's get it out of the way, and continue with our lives.

ianmr65

qwerty007 wrote: »

Probably wise. Presumably you are sitting in cash ...care to share which bank you felt safest to hold your deposits?

Not exactly. we paid off all our debts, sold our terraced 3.5 bed house in london at the top of the market there, in 8 weeks, around July 2007. Bought a 5 bed renovated and detached 350 year old cottage, with it's own grounds, in a village in the north west, six months into the house price drop that started at the begining of 2007 here, and which had been on the market a year.

Cut our capped at 0.7% above BoE repo till dec 2009 (wooho0!!) building society mortgage by 2/3rds. Put some spare cash into a 2 year fixed deposit, with a bank, to coincide with the rate cap end, and hopefully the end of the credit crunch. So we can a) not spend it, and b) cut the mortgage by another 3rd, when it matures. And bought some gold coins, which are loking like they are gonna double in value, as a hedge against the slide in the pound/ dollar, and in case things get really really bad.

Found much better schools for the kids. Down sized, as it's cheaper to live up here, than in london. And the quality of life is much better. Nothing like the levels of crime, and transport problems that london faces. Burning our own wood, to help heat the house, growing stuff to eat, and so on.

Also so we won't be as hammered by global warming over the next 20-30 years, as the south of england is gonna be. Flood plain checking and all that. And we have no plans to move again, so it doesn't really matter what the house is worth any more, just what the mortgage is. Unless house prices drop by 60-70% that is. Which even if you take the worst possible outlook is unlikely.

Meanwhile i've taken a year off, doing some volunterring and so on, while i plan my career change, at a lower level, and so i can have a turn at enjoying being with the kids a lot more, before the dreaded teen years start, in a year or so.

The only issue on the horizion, then, is the safety of the institution holding the 2 year fix deposit, but at 5% of notional asset base, and as it's covered by the FSA scheme it's not a biggie. And the safety of the building society, which will hopefully honour the rate cap, as repo rate falls, even if it's bought out. The next BoE intrest rate cut will be the test.

We plan to keep fit active, and working, well past notional 'retirement' age if we make it that far, as we belive that this helps keep keep you alive, look at judges, the lords, the queen and Rupert Murdoch. Compared to many 'pensioners' their age rotting away in care homes.
Also as pension provisons are a con. Goverment index linked pensions, and superannuation, and the state pension will go for a burton, as the ageing population increases, we can barely afford to pay them out out now, never mind in 20 years. And the private sector/ company pension 'business' is an imploding up-front charge ridden low-return mine-field.

Now if only the electrician would come round and finish my electric gate, I'd be a happy chapie!!

earlgrey_3

ianmr65 wrote: »

Good post, I agree in principle, but the current crisis, is unprecedented.

All crises tend to be "unprecedented", which is usually the reason why they happen, so yes, this crisis is unprecedented just as all the others before it were.

There was the crisis under the demon Barber when small banks were falling over and office blocks like Centre Point in central London stood unoccupied for years, and Heath's three day week crisis, and the house price crash crisis with thousands hit with negative equity, and the time when building societies were offering savers 16% interest and similarly priced mortgages, and Lamont's ERM crisis, and a whole lot more crises, all within my living memory with many others before that.

What's most different about this crisis is how much talk of a crisis there's been long most people in the UK have been directly affected in any real way.

What's so similar is that, as always, the younger generation think that their crisis is the worst crisis ever whereas, in retrospect, they can appear as little more than a blip.

qwerty007 wrote: »

Unlike stocks, housing bubbles don't burst,

I assume that is a typing error.:rolleyes:

ianmr65

earlgrey wrote: »

All crises tend to be "unprecedented", which is usually the reason why they happen, so yes, this crisis is unprecedented just as all the others before it were.

There was the crisis under the demon Barber when small banks were falling over and office blocks like Centre Point in central London stood unoccupied for years, and Heath's three day week crisis, and the house price crash crisis with thousands hit with negative equity, and the time when building societies were offering savers 16% interest and similarly priced mortgages, and Lamont's ERM crisis, and a whole lot more crises, all within my living memory with many others before that.

I just about remember the 3 day week, and clearly remember the others. Here is why i think this one is different.

The reaction by the all the central banks and goverments is 'hair trigger' to quote another poster.
The underling causes of the crisis are global, are effecting pretty much every bank, and large orgnisation in the world: and deep rooted, and to an extent unknown. Or at least the levels of exposoure are unknown.
For the first time since the 1930's, confidence in global banking is being severly tested.
The behaviours of the US fed, and to a lesser extent, the BoE, and the ECB are extraordinary, and the politicos are falling into line. It's all being very well co-ordinated. Something has got all these guys seriously rattled.

All the crisis you list were fairly local to the UK.
All the major global finacial crisis: say the oil crisis in the 70's and the tech stock boom & crash in the 90's, or the day that stocks fell by 30% were in specific sectors, or in specific financial instruments.

This one is across the board, stocks, bonds, commodities, credit, property, banking, invetsments, everything the whole shebang:

The only thing i can think of that comes close, that didn't actually end up in a major catastrope, (like the second world war) was the cuba missile crisis, and the threat of a nuclear war between the west and russia. That got the world seriously rattled. Not financially or economically tho.

tawse57

They have ramped up property prices to simply unsustainable levels. It has been a case of the emperor's has got no clothes. It is going to be bloody in the US when it all unravels over there but it is going to be much worse in the UK. Our house prices will probably fall by half in the coming 2 years.

TRUSt_NO_1_2

ianmr65 wrote: »

Not exactly. we paid off all our debts, sold our terraced 3.5 bed house in london at the top of the market there, in 8 weeks, around July 2007. Bought a 5 bed renovated and detached 350 year old cottage, with it's own grounds, in a village in the north west, ..........

We plan to keep fit active, and working, well past notional 'retirement' age if we make it that far, as we belive that this helps keep keep you alive, look at judges, the lords, the queen and Rupert Murdoch. Compared to many 'pensioners' their age rotting away in care homes.
Also as pension provisons are a con. Goverment index linked pensions, and superannuation, and the state pension will go for a burton, as the ageing population increases, we can barely afford to pay them out out now, never mind in 20 years. And the private sector/ company pension 'business' is an imploding up-front charge ridden low-return mine-field.

Now if only the electrician would come round and finish my electric gate, I'd be a happy chapie!!

Banks ? ..they can keep my overdraft !

Glad to see another with the vision not expect anything from the government (eg a half decent pension) in the future.Pensions are dying on their feet.Unfortunately workers will be forced to save in a pension scheme (what would the FTSE do without pension schemes ?!)

I have planned likewise,apart from me getting out of this country soon and 'staying' mobile,that is renting.Having young kids stops you from doing likewise (mine are old enough to look after themselves).

The government is already up to speed with what is going to happen,which is why they create a new tax each week and are moving the tax burden away from income tax (which is declining in real terms) and onto council tax,capital gains,'green' tax (cars,parking,speeding,emissions,congestion, petrol,air travel),health tax (drinking,smoking,drinking,drinking ..ok maybe too much drink!)
At the same time they seem impervious the the level of discontentment among the public that this country is halfway down the toilet,and the vast majority of the public can only see things getting much worse.This feeling of a bleak future,whilst the rich have become mega rich,is transmitted from today's parents to the young and I think is an underlying reason for a lot of anti-social behaviour.
I can think of nothing worse than seeing a future that will become increasingly bleak,whilst the elite few get ever richer,even if they screw up (eg hedge fund managers,chief executives etc...)

I think the terrorist laws have been enacted just as much for ordinary citizens if a state of anarchy ensues.Will they use them on haulage drivers who blockade oil terminals or the like when petrol and diesel hit £1.50/litre ?
There are already food riots occuring in countries around the world,and I'm not talking about Zimbabwe.

Hope the electric gate is 'electirifed'.

Good Luck !

ianmr65

TRUSt_NO_1 wrote: »

Banks ? ..they can keep my overdraft !

The government is already up to speed with what is going to happen,which is why they create a new tax each week and are moving the tax burden away from income tax (which is declining in real terms) and onto council tax,capital gains,'green' tax

I agree with pretty much all you say. Not sure the uk goverment / civil service is actually 'up to speed' with much at all: much of what i see is incompenetance, short-termism, expediancy, and knee jerk reactionism. Sort of lurching along in the dark, and tinkering at the edges. I think they are too useless for anything like a well thought out plan.

The penison/health aging population time bomb is a good example. 20 years time we are not going to be able to afford to look after the old and the sick, pay a universal pension, or continue to pay goverment index linked pensions. We can barely afford to do that now.

So a competent, and brave adminsitration, would put in place deep rooted plans to radically change the way we provide health care, care for the elderly. and pensions.

The problem is that any such plan would almost certainly end up in massive electoral defeat. As all the vested intrests today would scupper it. The grey lobby, unison, the BMA or whoever.
So no-one other than 'maveriks' like Frank Field is ever going to address it.

So instead we have big drives, and lots of initiatives on say, asylum seekers, and illigal imigrants who account for half of 1% percent of the social security and health budgets.

As opposed to the pension/nhs time bomb which accounts account for 70% of the social securty and health budget, and which no one ever talks about.

TRUSt_NO_1 wrote: »

I have planned likewise,apart from me getting out of this country soon and 'staying' mobile,that is renting.

A remote part of New Zealand is a good place to avoid the mayhem.

TRUSt_NO_1_2

ianmr65 wrote: »

I agree with pretty much all you say. Not sure the uk goverment / civil service is actually 'up to speed' with much at all: ....

The penison/health aging population time bomb is a good example. 20 years time we are not going to be able to afford to look after the old and the sick, pay a universal pension, or continue to pay goverment index linked pensions. We can barely afford to do that now.

So a competent, and brave adminsitration, would put in place deep rooted plans to radically change the way we provide health care, care for the elderly. and pensions.

The problem is that any such plan would almost certainly end up in massive electoral defeat. ...............

.......the pension/nhs time bomb which accounts account for 70% of the social securty and health budget, and which no one ever talks about.



A remote part of New Zealand is a good place to avoid the mayhem.

The government knows it is already in effect bankrupt,but hope they won't be around when the sh*t hits the fan...so I agree with your comment they would be kicked out at the next election if they tried to address the problem now.

Refreshing to hear someone actually mention the public sector pension liability,which is something like $1 trillion...and is going to get a lot worse with the 'binge' spending on the public sector that Blair has undertaken

This country is going to be in big trouble within 2 years...which is my maximum target for getting out.

Not New Zealand for me...too much like Britain from what I can gather.

ianmr65

TRUSt_NO_1 wrote: »

Not New Zealand for me...too much like Britain from what I can gather.

Fair enough. But bear in mind that flooding, increasing stroms and heat - from global warming - food, and water riots, and the massive population booms round the middle of the planet, mean that you've got to find somewhere north of latitude 53 (the north of the UK, the scands, canada, and russia), or south of latitude 45 (new zealand, and tierra del fuego).
Now bearing in mind that currently canada and russia, are still mighty cold in the winter- but this is changing - Then the south of new zealand is pretty much it. Less you fancy the (soon to be not)frozen north or chile.

In case you think i'm doom mongering read this:

http://www.timesonline.co.uk/tol/news/uk/science/article1751509.ece

"At first sight Lovelock’s predictions seem wildly at odds with the IPCC’s (Intergovernmental Panel on Climate Change) reports, but in many ways the only difference is in the vividness of the language:

At lower latitudes, especially seasonally dry and tropical regions, crop productivity is projected to decrease for even small local temperature increases (1-2C), which would increase risk of hunger.” What these measured tones imply, warns Lovelock, is that millions – perhaps hundreds of millions – of people living in equatorial lands will be forced from their homes"

PLIEGO

Are spainish banks such as the CAM Bank in danger also and should you only keep a limited amount of money in them? Does any body know