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Are your savings safe? article discussion
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I pulled most of my money out of Iceland a few days ago. If I hadn't this article would have me worried...
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/23/cckrona123.xml
Now if B&B would actually transfer my ISA I would be happy (22 days later... still waiting).
This telegraph article has been discussed in detail in this thread
http://forums.moneysavingexpert.com/showthread.html?t=814671
The article itself is an overblown, one-sided scare story, re-hashed from old news lifted from the FT, reuters and bloomberg.
Out of intrest which bank(s) have you chosen for your money?0 -
This telegraph article has been discussed in detail in this thread
http://forums.moneysavingexpert.com/showthread.html?t=814671
The article itself is an overblown, one-sided scare story, re-hashed from old news lifted from the FT, reuters and bloomberg.
That may be so, but as long as enough people get worried about Icelandic banks, then effectively they will be in trouble. I'm going with the herd instinct before it happens. If a UK bank collapses, I suspect the UK government will do all in its power to avoid a bank failure, even if that means printing lots of money to bail it out. The UK government won't help an Icelandic bank, and I'm not sure Iceland would be able to afford helping a failed bank, as the funds they need are a huge fraction of their GDP.
I've heard from a Faroe Islander how easily banks fail on small islands. Their economy was brought to ruins for a period due to a failing bank.
Of course the protection scheme here will probably pay up in the end, but after how long?
Northern Rock - safer than houses!Out of intrest which bank(s) have you chosen for your money?0 -
That may be so, but as long as enough people get worried about Icelandic banks, then effectively they will be in trouble. I'm going with the herd instinct before it happens.
As they are internet banks, operating across lot's of countries, a Northern Rock Style run is highly unlikley. + In Landsbanki's case 50% of their deposits are from Icelandic nationals, and have lot's of other asset sources, like say half the UK highstreet, and institutions (Whittards of chealsea, Hargreves landsdown and many others.)
A crisis if it's caused by anything willl be more akin to Bear Stearns. Where one of the banks runs out of liquidity, do to wholesale funding problems. Which are in no one's real control.
And in this case the Governor of the Bank of iceland, who is also an ex-prime minsiter has said (in so many words) he would expect the striken bank to be taken over by one of the others.
If a UK bank collapses, I suspect the UK government will do all in its power to avoid a bank failure, even if that means printing lots of money to bail it out.
Hbos, the smallest of the 'big five' with a market cap of $17bn, has asset/liabillities which are roughly a quarter of the UK's GDP.
I'm not convined that this Goverment would be in a position to do anything, printing money in this scenario would not be teneble. So they only option unless would be find a white knight to rescue it. Bearing in mind the woeful lack of co-ordination, and tri-partite approach, last time, I suspect they would fail.
This is why Merv and Gord are hawking round the other central banks suggesting that Goverments use tax payers money to buy (possibly toxic) securistied mortgage paper. None of the other banks were too keen.
And also explains the strenous denials about HBOS last week.I've heard from a Faroe Islander how easily banks fail on small islands. Their economy was brought to ruins for a period due to a failing bank.
The faore islands GDP, is 10 times smaller than iceland. Iceland has a strong economy, which has been growing steadily, and is reconned to be the most developed country in the world. There is no comparison.
Anyway this argument is like saying if the RBS failed the people of edinburgh would have to bail it out.Northern Rock - safer than houses!
What a surprise!!...
Stiil, if the UK ecomomy goes down the toilet, and the 'short period of nationalisation' is brought to a sudden halt, and NRK gets sold to say Landsbanki, who have been very aquisitive in the UK, you'll be back in the same boat. Wouldn't that be ironic!! 0 -
As they are internet banks, operating across lot's of countries, a Northern Rock Style run is highly unlikley. + In Landsbanki's case 50% of their deposits are from Icelandic nationals, and have lot's of other asset sources, like say half the UK highstreet, and institutions (Whittards of chealsea, Hargreves landsdown and many others.)
That may be so, or it may not be. Icesave holds 5 billion of savings in the UK, out of total assets of 33 billion for the bank Landsbanki. When a bank starts putting up notices about how stable it is on its website, I think it is time to worry a little. I think they'd need to increase rates a fair bit higher than they have to offset the possible risk for dealing with a foreign bank.And in this case the Governor of the Bank of iceland, who is also an ex-prime minsiter has said (in so many words) he would expect the striken bank to be taken over by one of the others.
Well, he would say that!Hbos, the smallest of the 'big five' with a market cap of $17bn, has asset/liabillities which are roughly a quarter of the UK's GDP.
I'm not convined that this Goverment would be in a position to do anything, printing money in this scenario would not be teneble. So they only option unless would be find a white knight to rescue it. Bearing in mind the woeful lack of co-ordination, and tri-partite approach, last time, I suspect they would fail.
Quite possibly, though I think the UK government has better chances of rescuing than the Icelandic government. The UK has already pumped a large amount into Northern Rock, increasing inflation and so on. Of course an HBOS failure would be an order of magnitude or more...The faore islands GDP, is 10 times smaller than iceland. Iceland has a strong economy, which has been growing steadily, and is reconned to be the most developed country in the world. There is no comparison.
Perhaps. They are trying to diversify away from the traditional forms of income (fishing, etc), as much as possible. The problem is that if there really is a big future banking failure, then the will have a large part of their economy wiped out (mind you, so would the UK). The Faroes were doing very well economically in the 80s, with everything looking wonderful. Then... My Faroese informer says that they wouldn't invest in Iceland currently, but maybe it's just sour grapes!
Well, they wouldn't! They'd have the UK, which is quite a bit bigger than Edinburgh.Anyway this argument is like saying if the RBS failed the people of edinburgh would have to bail it out.
Well, at least I'd have 30 days of warning to get my money out before than bank was released from public ownership, which is more than any other institution. The government will have to hang onto NR for quite a long time to get its investment back.What a surprise!!... Stiil, if the UK ecomomy goes down the toilet, and the 'short period of nationalisation' is brought to a sudden halt, and NRK gets sold to say Landsbanki, who have been very aquisitive in the UK, you'll be back in the same boat. Wouldn't that be ironic!!0 -
Well, they wouldn't! They'd have the UK, which is quite a bit bigger than Edinburgh.
I think a lot of what you say has merit. Especially that intrest rates should go up!!
I also think that very few so called large UK banks are actually UK institutions, any more. They are international banks who happen to have a UK HQ or background
The closest we have is Lloyds TSB and even that has an american CEO, and a large international presence. And possibly HBOS.
By no stretch of the imagination could HSBC, Barclays, RBS or Abbey be called 'UK banks', They are as british as Shell, BP, McDonalds and Ford.
Clearly Northern rock was a british bank. so is A&L and B&B. They ironically are they most at risk.
Similarly the so called icelandic banks are international institutions which have an icelandic base.
Anyway thanks for you're considered approach, It put's some of the UK print journalists to shame.0 -
What hasn't been authoritatively answered is the question of whether the positive balance in one's savings account is reconciled with the negative balance in one's loan account at the same financial institution?
(This is not really a question about the compensation scheme, but about insolvency law).
On this message board, it has both been indicated that the two accounts will be reconciled, leaving only the net balance outstanding, and that the debt will remain as a liability, while the asset will be treated separately.
Clearly, a serious problem arises when one owes a £100K debt, but offsets with a £70K savings account, if the two accounts are not reconciled on the collapse of the financial institution, since then the customer's net indebtedness would suddenly increase from £30K (£100K minus the £70K savings) to £65K (£100K minus the £35K compensation).
Warmest regards,
FAThus the old Gentleman ended his Harangue. The People heard it, and approved the Doctrine, and immediately practised the Contrary, just as if it had been a common Sermon; for the Vendue opened ...THE WAY TO WEALTH, Benjamin Franklin, 1758 AD0 -
FatherAbraham wrote: »What hasn't been authoritatively answered is the question of whether the positive balance in one's savings account is reconciled with the negative balance in one's loan account at the same financial institution?
There is an FSA discussion paper available here, which suggests the two are currently reconciled. The MSN article referred to in message 62 earlier in this thread also suggests that this is the current position.Debbie0 -
debbie42's post reminds me that the consultation paper has a closing date of 23 April 2008 for submissions to be sent in. (Hopefully no banks will have gone bust before then.)
Perhaps some forum members affected by the issues up for discussion (e.g. setting-off, quicker pay-outs, etc) would care to make submissions.
The main parts relevant to FSCS are pages 18 & 19 of the pdf file (p.14-15 of the report) and chapter 5 - though there is lot that is of interest elsewhere in the report.Imprudent granting of credit is bound to prove just as ruinous to a bank as to any other merchant.
(Ludwig von Mises)0 -
What hasn't been authoritatively answered is the question of whether the positive balance in one's savings account is reconciled with the negative balance in one's loan account at the same financial institution?
It has. If you read this week's email you will see we've been talking to the FSA about it and the guide has been updated
Savings and debts are reconciled.
MartinMartin Lewis, Money Saving Expert.
Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.Don't miss out on urgent MoneySaving, get my weekly e-mail at www.moneysavingexpert.com/tips.Debt-Free Wannabee Official Nerd Club: (Honorary) Members number 0000 -
Er, the link to "this week's email" doesn't seem to work ...
try :
http://www.moneysavingexpert.com/tips/26-03-2008/Imprudent granting of credit is bound to prove just as ruinous to a bank as to any other merchant.
(Ludwig von Mises)0
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