company share save scheme - is the money safe if the company goes bump?

anna42hmr

thanks for the replies i appreciate the help

i am not sure who holds the money for the account, i will look into that

debbie42

You should get an annual statement from the holding bank. I certainly used to in our regulated sharesave scheme.

anna42hmr

we dont get an annual statement debbie, i havent in the 5 yrs i have been paying in, however we can sign into a website ran by "computershare" showing our payments into the share save scheme, and any shares we have already purchsed (ie work profit share etc) no mention on which bank it is held with, so may ring up in the week to find out

ianmr65

All sharesave sceme vary slightly. But in principle

The cash is normally deposited in a 'sharesave account' in whichever bank is running the scheme, which is akin to a normal savings account. Though you should check, with the bank to see whether the account and and bank are covered by the FSCS.
The scheme is linked to a number of options to buy shares in your company, at a certain price, on a certain date - Free of Capital gains at time of vesting.
At the time that the scheme matures you can normally do one of three things.
1)Excercise the option and buy the shares, and sell them tax free, less a nominal dealing charge.
You would do this say, if the option price was 100p and the current shareprice was 200p and you had saved up £100, so you would get just under £200 back.
2) Excercise the options and keep the shares, though you would be liable for capital gains tax, on any FURTHER profit you made, unless you wrapped them in a shares isa. You might choose to do this if the shares had only gone up by 20p
3) Not excercise the option and take the cash that had been saved. which would normally come with a 'bonus' intrest payment
You would normally do this if the option price was below the current share price. But you'd have the option to do this regardless.

No scheme would ever force you to vest your options if you did not want to.

NB Many copmanies operate other share option and share bonus scheme which operate on entirely different principles.

ianmr65

Leeds_Fella wrote: »

I have lots of HBOS shares through the various company share schemes over the last 4 years, I work there, have lots of equity in a BOS savings account from the recent sale of my house.

All eggs in one basket or should I not be worried ??

Comments?

I'd hang onto the shares, but move the cash. Northern rock is your best bet. 100% safe whilst still owned by HMG. Probably better intrest rate as well, notwithstanding you may be getting a preferential bank employee rate.
Calling bank share prices at the moment is a mugs game. To maximise your gains or minimise your losess i'd take a serious intrest in the banking, and HBOS articles, in Finacial Times, and Yahoo finance.

Not wanting to paint too bleak a picture, but you might find yourself peniless, shareless, and jobless if anything happened to HBOS.

We are in a sort of calm after the storm when it comes to the credit / banking crisis. Either it's peaked and things will start to get back to normal.
Or a hurricane is on it's way.
Or it's peaked in the states, but the UK has yet to go through a similar housing/ mortage nightmare that's only just started, here.
Or the impact on Europe has yet to be fully felt, as they are somewhat insulated, and we will be buffeted by that, when it hits, as well as everything else.

Leeds_Fella

IanMr65

Fully agree with you last para. I do need to diversify and move money around. I do have full faith in my employer, but, at times like this, you really do not know what is around the corner and what bad news is hidden away

The fixed rate I have with BOS for the next 6 months is better than NR, but there is a huge risk in keeping all my eggs in one basket

ianmr65

Leeds_Fella wrote: »

IanMr65

. I do have full faith in my employer, but, at times like this, you really do not know what is around the corner and what bad news is hidden away

I'm totally convinced that HBOS, and all the other banks , are being run as well as they can be. The problem is is that the rest of the global banking community, needs to have faith in the fact that a particular institution will continue to meet it's margin calls and pay it's debts, and stay liquid.
Either to continue lending to it. Or more importantly, as not much lending in going on, not to call in the paper.

The more exposure a bank has to the UK/US housing market, and the more it has used those assets as collateral for funding, the more at risk it is when those assets fall in value.

So the future for banks like this, is wholly dependant on the severity of the fall in the housing markets, and how willing the BoE are to buy, rather than loan against the assets they hold.

This is precisily why Alister Darling and Gordon Brown are trying to get the European central bank, to buy collateralised mortgage assets, and the paper and derivatives, attached to them. Probably cos the BoE can't afford to do it on it's own. Ironic, really, going cap in hand to the eurozone, when for years we've resisted joining, what goes around comes around...The ecb has refused, btw.

The difference between now and 1987, is that the housing crash then, caused problems for homeowners, the banks were pretty sanguine, as they simply repossesed, and chased for the balance.

This time as some banks have been much more reliant on funds borrowed against mortgage assets, at many times their value, (on the expectation that intrest would continue to be recived over many years) if the value of those assets start to fall, and defaults/repossesions happen. Those intrest payments dry up. This is basically the root of the sub-prime problem in the states.
Take Northern Rock. they where very heavily exposed to mortage asset backed paper, even to sub-prime assets in the states, and had so little funds on deposit, that this caused the market to get spooked, stop lending, and caused the liquidity crisis. This in turn caused the depositor run. And nationalisation.
And this is why all the banks in the UK with large expsoure to the mortgage market, are suffering, from falling share prices, ratings downgrades credit defult increases and rumours about possible collapse. Making it even more difficult for them to get funding. And why many banks are reluctant to offer mortgages at the best rates, on less than 75% LTV.
This by the way is the best indication of what banks expect the overall fall in the housing market to be ie 25%

Add to this, the fact that shares in free fall, make people who 'short' them a lot of money. + The lack of co-ordination bewteen the BoE, the Treasury, The Primine Minister, and the FSA: and you have a recipie for factors WHOLLY outside the bank's control, to cause it to collapse.