Icesave- Martin is wrong.

MSE_Martin

“In the event of a failure of a topped up bank (i.e Icesave) the home state scheme would have lead responsibility for claims and would pay the first part of any compensation. This might cause some delays in resolving claims”

This is an interesting quote and one I will check out and add to my blog. Thank you for it.

However if any bank were, in the unlikely event, to go bust. The delay to getting money would be substantial. Even if it were a full UK FCSC scheme. Also with a £4bn payout max on the FCSC in many ways I find that more of a worry than the UK scheme; so I think the system has holes in many places.

To arbitrarily drop accounts on this basis, would break what the articles are about. I prefer to list all accounts in order, but where there is an issue highlight it. All mentions of ICesave are to link to my blog on it from today (we had a web outage for two days so changes were tough before).

You will note Moneyfacts, Moneysupermarket and the other comparison sites; are not dropping and banks nor putting any notes. My aim is to provide full info and choice, not to censor.

Martin

neilp

I have read Martin's posts on this forum and his blog and find myself in complete agreement. I have an account with Icesave, which I intend to continue to use. However, my main concern is that a run on Icesave - similar to what happened to Northern Rock - is the the most likely way it could find itself in trouble. However, because all its accounts are online, it could be more difficult for others to know it is happening than would be the case if people were lining up outside a High Street bank.

For what it's worth, I check my Icesave account every day and haven't noticed any delays logging on - which I would expect if mass withdrawals were happening. Nonetheless, there really is no way to know, and I have read press articles that suggest that a lot of savings recently have been withdrawn. On the other hand, I guess that this avoids people jumping on a bandwagon, which seemed to happen during the Northern Rock run.

mister_bojangles

I think we should stop the seeming scapegoating of MSE Martin. At no point in his SUGGESTIONS did he claim that his suggestions are irrefutable and need not be investigated further by whoevr has access to this site.

For instance, I saw him on TV the other day, recommending Barclays ISA of 6.5% as a good deal. He did not indicate that you cannot transfer other ISA funds into the account. If any listener rushes to Barclays without reflecting on their options, do not blame MSE Martin. I think it's up to readers/listeners to take responsibility for their actions.

Guys_Dad

Might it not be a worthwhile addition to the Best Buy tables just to indicate which investments were and were not covered in the first instance by overseas compensation schemes rather than the UK one? Then people could make up their own minds. I am now a bit worried about my ICICI holding.

silentfox

Guys_Dad wrote: »

Might it not be a worthwhile addition to the Best Buy tables just to indicate which investments were and were not covered in the first instance by overseas compensation schemes rather than the UK one? Then people could make up their own minds. I am now a bit worried about my ICICI holding.

This would be a great idea, ICICI I think is covered fully by FSCS,
http://www.icicibank.co.uk/home_regulatedFSA.html

Stompa

There's a fairly comprehensive list available here:

http://howsafeisyourmoney.co.uk/

MSE_Martin

Might it not be a worthwhile addition to the Best Buy tables just to indicate which investments were and were not covered in the first instance by overseas compensation schemes rather than the UK one? Then people could make up their own minds. I am now a bit worried about my ICICI holding.

Yes its a great idea - which is why its been there for weeks. The are your savings safe article details all of this - and any account which is not full UK FCSC system has an extra note tellin gyou. The reason ICICI doesn't have the note is becuase its a full member of the FCSC as is every non-EU bank

Martin

Lavendyr

silentfox wrote: »

Also I am now concerned that you seem to be ignoring the statement given to the Working Lunch program, by the FSCS where they explicitly sate there could well be a delay.

But they *don't know* that to be the case. You tout it about as a fact that there "will" be a delay but it is still just the opinion of the FSCS - who are ultimately in no better a situation to comment than anyone else, since it's never happened before.
Moreover, see my point above ref Working Lunch, like Martin's blog, being a journalistic endeavour.

silentfox wrote: »

Martin you have to agree that many will simply see best buy and follow it

Just like many other people will read "Icesave will go bust" in the Daily Mail or whatever and follow it. Martin is a journalist, not an IFA, as it states repeatedly on this site. What he's doing is no better or worse than what any other journalist does. It's opinion, not advice, and certainly not fact.

ianmr65

neilp wrote: »

However, my main concern is that a run on Icesave - similar to what happened to Northern Rock - is the the most likely way it could find itself in trouble. .

****PLEASE READ THIS*****

I'm not sure that a uk withdrawl/run a la northern rock would actually matter that much.

The key issue for the icelandic banks is the hedge fund speculators, and dealers who are 'shorting' them. Everything else is secondary to that.

FAQ

I'm worried, this is something we can't control, what are they icelandic authorities/banks doing about this then? :

Regulatory investigation - In the USA and europe

Making cheaper funds avilable to the banks

Possible legal action against
bear stearns and the 4 named hedge funds, and possibly others.

Direct Intervention in the markets - Bear trap -
forceing the speculators to 'close their positions'

Taking advantage of the currency fluctuations to make money even in a crisis

How are they going to pay for all this when reserves are low and current account defict is ropey?

Calling in the promisies for finacial support from the Nordic banks

Calling on the ECB and poss uk due to the UK high street intrests for support

Raisng money from Private Bonds

Buying banks stock

Buying selling /currency

Iceland has alot of valuable geothermal and Mineral assets

Iceland has zero budget defecit

What happens if it does not work?

Which ever bank is looking shaky, and they are all a long way
from this, would be taken over by one of the others. The prime minister more or less said this.

What does 'shorting' mean?

Aiming to profit from falls in the price of stock & currency,
and rises in the credit insurance spreads

What does 'close their positions' mean.

In order to 'short', a stock or currency, and profit from a fall, you have to borrow, and sell it. IE selling stuff you don't own. And hope the price will fall.
So you put the proceeds of the sale into the bank. And if the price does fall, you buy the number of shares you owe, again, this time at much lower price. You then keep the profit.
BUT if the price rises you start to lose money fast. At that point you have no option but to buy back at more than you sold for, or risk losing a lot more money: when the time comes to give the shares or currency back.

HBOS shares were massively shorted a week or so ago.

Additionally Landsbanki who are the owners of Icesave

Holds the bulk of icelandic savings accounts. 50% of their deposits come from icelandic nationals only about 20% from Uk nationals.

It has operations all over the Nordic states and europe. It owns hargerves lansdown, Heridtable, and Landsbanki Kepler,

It has not extended itself in the leveraged buy out market. It is traditionally very risk averse. It has no exposure to sub prime, and no liquidity problems.

It's the icelandic equivalent of Lloyds

The bank that is most impacted by the current crisis is Glitner, as it has the most leveraged exposure to the commercial sector.

RayWolfe

nilrem wrote: »

Surely someone with cash to save would not just look here and invest their cash in an account listed as 'Best buy' without doing a little more research? IMHO most people that come here are a little more 'canny' than that.

Really?
Maybe, just maybe, a few of the posters are, but the rest? Do you read these forums? My judgement would be that few read the T&Cs, let alone the finer points of money management.