Icesave: how safe are your savings? Facts and myths

eyesy

mykw wrote: »

I just opened an ISA with Icesave last week, although I've not yet deposited any funds at all.

Due to all the uncertainties I'm relucant to do any deposit, so if I was to phone them and cancel my account would that mean I can not open another ISA with anyone else in this tax year?

I'm sure someone will correct me if I'm wrong, but AFAIK you can open as many ISAs as you want in a tax year - the trick is that you can only have one open at a time in the same tax year:

1. Open account with Bank A.
2. Invest £500 in Bank A.
3. Open account with Bank B.

You must then transfer your £500 from Bank A and close that ISA down before you can start to invest in Bank B.

In the next tax year, you can leave Bank B with the £500 in it, and open a new ISA to invest your new £3600 annual ISA limit in.

explorer2_2

avonlea wrote: »

Did anybody see the Channel 4 news this evening? My understanding was that deposits in Kaupthing were protected but that Icesave could not necessarily guarantee savings of overseas investors. Am I right?? Been searching to see if Martin could give us his thoughts on this situation but can't find anything up to date.:huh:

Yes, I saw the programme. I am normally a fan of Channel 4 News, but I think this was an example of how the media can create panic and make an already dire situation worse. In the kind of environment we are currently living in there is an even greater need for the media to provide full, clear and accurate information. The overall impact of the Channel 4 item on Icesave was that the Icelandic Government was guaranteeing in full the deposits of Icelandic residents but not overseas residents. This seemed to create doubt in some viewers as to the guarantees in place for overseas residents. Jon Snow's comment about "buyer beware" was also unfortunate and inappropriate. Many people have invested savings in Icesave in good faith based on expert advice. As far as I understand it the guarantees for UK residents are the same as they have been all along, as outlined in some other posts. Why would the Icelandic Government provide guarantees to cover deposits in full to UK residents when under the Compensation Scheme the FSCS has to cover amounts beyond the €20,887 limit up to the maximum covered under UK regulations? I feel that Channel 4 News last night failed to match its normally high standards of reporting.

Paul

wadeall

Savers in Icesave are in the most dangerous position of all UK savers right now. By all reports Landsbanki Icesave's parent is a well run bank and has avoided the obvious pitfalls of US mortgage exposure etc. Unfortunately none of that matters because the interbank markets on which many banks rely for liquidity are frozen solid. The bank may be solvent ie it's assets are worth more than it's liabilities, but if it can't get hold of cash when depoitors demand repayment it will still go bust and at firesale prices, its assets re unliklley to cover liabilities. Crucially, unlike UK, EU or US banks it cannot rely on a powerful central bank to provide liquidity. Iceland has just over 300k people - the size of Croydon. Total bank liabilities run at something like USD300k per inhabitant. If the banks go down (maybe a 50% probability before the end of the month, quite possibly in the next few days), then the problem just gets shifted to the Icelandic State. The currency has already dropped 50% this month and such news could well lead it into freefall. Because it is part of the Passport situation, the legal position is that depositors would need to look to Iceland for the first c GBP16000 of any compensation, the next GBP 34,000 would then be protected by the UK scheme. Let's assume that Iceland's 200,000 UK customers hold an average 10k in the bank that's GBP 2bn. Iceland's total GDP is about GBP 8bn at purchasing power parity exchange rates, but maybe as low as GDP 4bn if the currency collapses even further as it surely would. In the context of the standard of living of Iceland's population halving overnight, there is little chance that Iceland could find 50% of its GDP just to compensate the UK savers of one of its banks. If all this happens getting your first GBP16000 back is going to depend on either the other Nordic countries helping out Iceland or the UK Government picking up the tab. Legally speaking they would have no obligation to do so. Given the political situation at the moment and the noises the Government has made about protecting UK savers and the complexity of understanding the Passport scheme, I'd say there would be a 90% chance that Brown sill step in and save that first GBP16,000 and maybe also any excess over GBP50,000, but GBP2bn is not a small amount of cash, so you would be taking a gamble. Certainly if you have a penalty free withdrawal option the only sensible advice would be to get your money out as soon as you can.

I understand that Martin want's to act responsibly and not to promote panic, but this situation has moved on radically in the last day or so with even the Icelandic prime minister warning of potential national bankrupcy. This site has been at the forefront of highlighting Icesave's market leading rates and if MArtin fails to comment and the nightmare scenario I outline above plays out, his excellent reputation will be severely tarnished.

Wade

csiman

Just noticed this in their press releases:-


We are not currently processing any deposits or any withdrawal requests through our Icesave internet accounts. We apologise for any inconvenience this may cause our customers. We hope to provide you with more information shortly.

Zedkay

That's on their front page now. I'm wondering though, about the word 'through' - whether that means business can't be done online but that transfer requests via another bank might still be possible. In common with other people here, I put all my savings with Icesave in response to Martin's recommendation, and I'm now feeling decidedly jittery.

RichieB2B

I just cleared out my Icesave account in The Netherlands. The site seemed to operate just fine as always. Of course Icesave has only been operating here for 5 months, and they must owe a lot more money in the UK..

Optimist

REYKJAVIK, Oct 7 (Reuters) - Iceland has dismissed the board of directors of Landsbanki and has put the Icelandic bank in receivership, a minister told state radio on Tuesday. Commerce and banking minister Bjorgvin Sigurdsson said the move was made in cooperation with Landsbanki and the bank would be open and run as normal while the changes were taking place. Sigurdsson said Iceland’s Financial Supervisory Authority had put its own people in place of the bank’s board. Late Monday, Iceland adopted sweeping powers over its battered banks as its financial system tottered and its currency plunged.

csj_2

Has anyone tried, successfully or not, to close an Icesave 6m or 12 month Fixed Rate account. Their terms and conditions state that no withdrawals are allowed until the end of the term but, in the current climate, it would be useful to know if one could somehow close one of these accounts even if all the interest were to be lost.

parist

BBC LATEST: Iceland's market authority says it is taking control of Icesave-owner Landsbanki. More soon.

I can't get into my account now, spoke to Icesave Cust Services. They explained that my action of closure last night, locked my account for deletion. The transaction to transfer still goes ahead...phew!! or maybe NOT!!!

Zimmy_2

Just phoned them, and they said they know about the message on the website but they are waiting to hear any further information themselves.
They said they can't do any transactions over the phone either.