Following the recent debacle in the US sub-prime mortgage market, it soon became apparent that we are all about to witness a major global economic slide which is starting to resemble the period just before the 1929 crash. The Fed and ECB can't hope to prop up the system forever with injections of cash.

In the UK, Northern Rock have been implicated in this looming disaster and now appear to have a questionable future.

Does any member know if or how many of the other UK banks or building societies are in the same position? If so, which ones and what are your feelings about having ANY savings invested with them?

If you want total security for your savings you could open an easy access account with NSI, but the interest is paid gross so you have to declare it for tax. The rates are not great but it is 100% guaranteed, like their premium bonds, index linked savings certs etc

Even in the worst case scenario I cannot see any of the big banks going bust. During a recession or HPC it is only a relatively small number of people who default. The vast majority continue to pay off their debts (or more importantly the interest on their debts). It is quite likely that some banks will actually increase their profits, which is why I am a long term holder of HSBC shares.
There is always a potential for a Nick Leeson style rogue trader bringing down a bank, but these are incredibly rare and completely unpredictable.
If we do reach a position where the likes of RBS and HBOS go bust then your money would be better invested in property!!
If you're really worried then don't deposit more than 30k in any one bank, but it seems a lot of effort for a very unlikely event.

Thanks for all of the feedback to date.

I am aware of the safeguards offered by the FSA and I thought it might be a useful exercise to spell out the current level of protection:

The Financial Services Compensation Scheme (FSCS) protects you if the institution your money is with goes bust.

FSCS is an independent body, set up under the Financial Services and Markets Act 2000 (FSMA).

In the case of savings, the maximum compensation level is £31,700 per person. You can claim 100% for the first £2,000 of an account balance and 90% of the next £33,000. Balances above £35,000 are not covered.

The scheme covers authorised firms and it's illegal for a business to take money on deposit without being authorised by the Financial Services Authority (FSA) which is the independent watchdog set up by government to regulate financial services in the UK and protect the rights of consumers.

See www.fscs.org.uk

As several other people have pointed out, the FSA protection is all well and good provided they have the funds to provide - i.e. if several institutions went under they could run out of money.

I know some say the banks can't or won't go bust, but it still worries me. As I don't know much about these things I seek out as much info as I can to see if I'm worring about nothing. This article tells me I'm not, check it out

http://money.guardian.co.uk/investments/sh...2150779,00.html

Also check out the guy's credibility at

http://www.blueplanet.eu/blueplanet_news.8.html

Am I right in thinking that if you hold savings with two institutions and they BOTH collapsed, the FSA would only offer ONE lot of compensation to a maximum of £31,700?

http://www.housepricecrash.co.uk/forum/ind...showtopic=53902...

I was recently lambasted for asking about the links between Sainsburys and HBOS on the MSE forums.
I reckon they are one and the same in terms of safety from the FSCS.

Nope, HBOS & Sainsbury's are under a separate coverage.

HSBC is safe; Scot/ Irish and the odd euro bank involved heavily in property in last 3 years. RBS is not safe at all. Look for banks that have grown largely off the back of the property upcycle.

Complete and utter plebs on there, i wouldn't bother.

And as for that tit Martain, last time i saw him he was complaining on tv because there was no one stop shop for comparing the best mortgage deals.

have the same worries deciding where to put my cash.

All of my savings accounts are coming to the end of the "extra bonus" period.


One account i have far to much money is lloyds...LLoyds were safe but they seem to be sticking their noses into everyone elses business. For instance HBOS takeover.. A deal with northern rock offering customers new mortgage deals when their existing deals come to an end.
Lloyds rates are crap at the moment. even if lloyds take over every bank , theres nothing extra in it for me.



have read articles making me suspicous of the banks that are offering massive interest rates, probably in financial trouble and just trying to balance their books.

I have kept my premium bonds as they are safe backed by the HM treasury. I never thought having a few £££ could turn into a pain in the ar$e

Now Northern rock are government backed surely they must be one of the safest places for your cash or am i missing something??????

Has anyone managed to find a web site that discusses the 'relative safety' of the UK building societies still in existence?

To date, I have assumed that UK building societies aren't quite as exposed as the banks to the current global credit-crunch nightmare.

However, the recent demise of the Cheshire BS and Derbyshire BS has left me with many doubts about the safety of my own savings accounts.

I suspect that any further advice would be extremely useful to most of us at a testing time like this.

I now look forward to hearing from the more 'informed' members amongst us.

Interest rates influence spending and saving in the economy and the prices we pay for goods and services. Low inflation helps to maintain a stable economy and the value of our money.
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Dhananjay

Link Building

And deservedly so, because you reckon completely and utterly wrong. Sainsbury's Bank (a 50:50 venture between J Sainsbury and HBOS) operates under its own FSA banking license. Consequently, under UK law the deposit guarantee for Sainsbury's Bank is as seperate from HBOS as is HSBC or Barclays.

It is simple to find this out doing a quick bit of research on the internet (and I mean sites such as FSA, HM Treasury etc, not discussion fora). If more took the time to find the facts, fewer would be worked up into an unnecessary worry by misinformed chatter and opinions.

It still raises the question, JayK, of who pays out if HBOS went bust.
It would be a bit more complex than a bank like Northern Rock.
HBOS would presumably put it's Halifax and Bank of Scotland depositers first in line, would there be any left for Sainsbury's customers?
Sainsbury's wouldn't be too pleased to have to find 100%, if there was no money left.
Supposedly Sainsbury's could buy out the 50% share, if they wanted to? Would they want to?