More here ...............

http://www.telegraph.co.uk/money/main.jhtm.../cckrona123.xml

Beware , the norse men

Yes, these reports are a little worrying; especially having a couple of accounts with Icesave (one of which is fixed for another few months).

Their internet service has been good to date, when compared to A&L for example; however in light of the current scare stories,

Does anyone know if the compensation amounts extend to the interest earned to date. i.e. lets say it goes tits up half way through this year would we still be entitled to the original deposit (under 35K) as well as the 6 months interest (yet unpaid) already earned on the fix rate?

On their normal esavings account the amount would have had the interest already applied on a monthly basis so would already be part of the total balance to date.

The other major consideration would be how long it would take to sort out the paperwork and actually get the money back again, presumeably incurring further loss of interest in the meantime. Is this reclaimable?

Anyone else looked into the details of this or have any other info on the Icelandic economic situation?

Short of that, the terms and conditions of the fixed rate state "no withdrawel within the period". Does that mean no withdrawel full stop or no withdrawel without total loss of interest?

Any help info appreciated

I've got a few more months left too on an Icesave 6-monther. I'm not sweating that one much to be honest, but then it's not exactly a huge amount of money. And the interest rate rocks.

As for Icesave's instant access account - 6.05% is pretty sad in this environment and as northern rock's tracker online has been relatively generously reduced just to 6.25% I don't see much point in staying loyal to Icesave. I've set up an instruction to move most of my instant access funds out as of tomorrow. Hope we don't all start a run.

MJS,

I too am in your postion.

From the cursory reading I've done so far, it would appear that Iceland's own compensation system picks up the first 15k, topped up by our own compensation system up to the first £35k.

What is not clear is if the country becomes bankrupt and cannot pay the first £15k, will our compensation system pick up the full £35k?

What I asked IceSave a month ago about moving money from the bond the reply was a flat no. However, if you were looking to buy a house they would 'consider' it with loss of 3 - 4 months interest as well as a solicitors letter.

So there you go.

The bet seems to be on Iceland's own financial health if IceSave go to the wall.

OK thanks for the information.

I chose Icesave in the first place as I liked the fact I didn't have to keep moving the money about. With Bradford and Bingley, Abbey, A&L etc you have to keep reopening accounts once the teaser rates end which is irritating; Although probably not as irritating as trying to get the money back through some sort of compensation scheme for several months or longer, should the Icelandic economy run into trouble.

Does anyone know what proportion of their economy is in the financial sector?

If you google it you'll find it. I tried 'Icelandic economy' and it gave some v good money wise articles as well as pdf style reports.

I'll go through it later.

Basically last year their debt to GDP was 20%! Which is rather large. I'm no economist but if their currency has just fallen by 25% that would surely mean a rise in their debt as their currency isn't worth as much perhaps?

So......... just how long will Iceland be able to continue if the story in the Daily Telegraph has legs?

Of Relevance:



http://www.thisismoney.co.uk/ask-an-expert...;in_page_id=111

Could Kaupthing Edge be the next Rock?

This is Money

22 February 2008

I've been hearing suggestions that the Icelandic banking system is on the verge of collapse. Is this true? And does this mean I should pull my savings out of Icelandic-owned Kaupthing Edge? - A.S. Bennett, Walsall

A safe bet? Kaupthing UK office

Alan O'Sullivan, savings and banking correspondent with This is Money, says: In this case, you may think there is no smoke without fire. Moody's, the international credit-rating agency, recently described Iceland's banks as 'fragile', and said recently it was continuing its on-going review of their credit-worthiness.

Furthermore, research from investment bank Morgan Stanley reveals Kaupthing Edge's borrowing costs have increased 400% in the past year, leading analysts to conclude that the bank is 7.5 times more likely to default than any other European bank.

That said, Kaupthing, which made an impressive debut into the UK savings market earlier this month, is fully covered by the UK's Financial Services Compensation Scheme. Under this, all your savings are guaranteed up to £35,000. If you have more than this with the bank, perhaps now is the time to pare your savings down and redistribute them among its high-interest paying rivals such as ICICI or Bradford & Bingley.

Of course, one of Kaupthing's main rivals is its Icelandic colleague Landsbanki, the origins of the popular Icesave account.

You may also have concerns over Icesave at the moment, given the amount of print expressing concern over Iceland's banking system since the Moody's report three weeks ago.

Unlike Kaupthing, Icesave's borrowing costs have only increased by 200% over the past year, the same as Bradford & Bingley's. But like some foreign-owned banks in the UK, Landsbanki operates under a less attractive 'passport' system to the FSCS, where they run the equivalent of a UK branch from their home country.

This gives them European Economic Area authority rather than FSCS authority. The result: in the event a bank goes bust, you would still be covered up to £35,000, but you would have to claim a substantial chunk of the money from the foreign bank's home country.

Ireland, one of the countries with subsidiaries in the UK, pays a maximum of £14,000 in compensation, Holland pays £15,600 and, finally, Iceland pays £16,300. Any sum over this must then be claimed from the FSCS.

In the event of a banking crisis in Iceland - Moody's may have its concerns but Iceland's public finances remain healthy - you would first have to wait to receive your £16,300 from the Icelandic system, which could take months if the whole system collapses.

Some of my money is coming out of Icesave. I saw this article on the main forum and it made up my mind:

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Clearly the Icelandic government are not completely in control if they are having emergency meetings - well, no more in control than the Fed is. Some of my money is in an Icesave 6-month bond so that will be staying put for a few more months at least.

The list of high-paying instant access accounts reads like a list of all those banks that have warnings against them - A&L, B&B etc. I'm very reluctant to go with ICICI or the First Bank of Nigeria. The consensus seems to be that Northern Rock's Tracker Online seems best (how times change).

I've just taken out a slice too and left the minimum amount in. The fallback of £35k guarantee doesn't give me any desire to actually go through that process. I'm sure you'll lose interest and it will be a lot of hassle.

I'm sure you are right, but for those of us in the six month bond that is the only alternative open so not all is lost so to speak.

Its not like its in ICICI a bank which haven't signed up I'm lead to beleive the banking code.

http://www.fscs.org.uk/consumer/faqs/

Just in case things go t1ts up.................

Consumer FAQs about FSCS
1. What is the Financial Services Compensation Scheme (FSCS)?
FSCS is the UK's statutory fund of last resort for customers of financial services firms. This means that FSCS can pay compensation to consumers if a financial services firm is unable, or likely to be unable, to pay claims against it. FSCS is an independent body, set up under the Financial Services & Markets Act 2000 (FSMA). Our service is free to consumers.




2. Where does FSCS fit in?
FSCS deals with claims against authorised firms (those regulated by the Financial Services Authority) that are unable, or likely to be unable, to pay claims against them. This will generally be because a firm has stopped trading and has insufficient assets to meet claims, or is in insolvency. We describe this as being in default.

The Financial Ombudsman Service deals with complaints against authorised firms that are still trading.

We have produced a guide jointly with the Financial Ombudsman Service (FOS) and the Financial Services Authority (FSA), explaining the separate roles of our three organisations and how we work together.




3. How can I find out if a firm is a 'member' of FSCS?
If the firm is authorised by the Financial Services Authority (FSA) you will have access to the Financial Ombudsman Service and to FSCS.

You can find out whether a firm is regulated by using the FSA's Firm Check Service on its consumer website. You can also find out about the status of a firm by telephoning the FSA's Consumer Helpline on 0845 606 1234 . They will be able to tell you if the firm is still authorised to trade, and how to get in touch with it.




4. What if I have a complaint against a firm that is still trading?
You should complain directly to it. If your complaint is not resolved, you should contact the Financial Ombudsman Service.




5. How do you decide whether you can help me?
To qualify for compensation you must be eligible under our rules which are made by the Financial Services Authority (FSA), the independent watchdog set up by government under FSMA to regulate financial services in the UK and protect the rights of consumers. The rules tell us which types of claim are eligible for compensation, and limit how much compensation we are allowed to pay. Different rules and limits apply to different types of claim.




6. Do I have to pay anything to have my claim considered by FSCS?
No. FSCS is a non-profit, independent organisation set up under FSMA. Our service is free to consumers.




7. Why is there a limit to the compensation available from FSCS?
Our rules tell us which types of claim are eligible for compensation and limit how much compensation we are allowed to pay. There are limits to the protection FSCS can provide. (See Question 5).

To be eligible for compensation you must have lost money because of your dealings with a regulated financial services firm. FSCS can pay compensation only for financial loss. For example, for investment claims the compensation we pay would try to take account of the financial position you would have been in had you not invested.




8. Does compensation cover any guarantees I was given?
The fact that the return on your investment or policy was described as 'guaranteed' does not necessarily mean that we can pay you compensation equal to the return you were promised. FSCS can pay compensation only for financial loss. For example, for investment claims the aim of compensation is generally to put you back in the position you would have been in had you not invested.




9. What happens if the firm I am claiming against was insolvent or declared in default before FSCS took over responsibility for compensation (1 December 2001)?
The rules and compensation limits of the pre-existing schemes will apply, although FSCS will handle the claim. Compensation limits and eligibility rules may differ.




10. The firm I dealt with is no longer trading, but FSCS says it cannot help me. Why?
As a fund of last resort, we can only consider claims if they cannot be paid by anyone else. If the firm is no longer trading but still has assets that could meet your claim, we are unlikely to be able to help you. This means that you will need to take your case up with the firm you dealt with.

If you are having problems finding the firm or its owners and wish to pursue your claim, we may be able to provide contact details. Please contact us.

If the firm (or its owners) will not consider your claim, you could take legal advice or contact your local Citizens Advice Bureau for help.

The Financial Ombudsman Service (FOS) may be able to help you make your claim in some circumstances.

A guide to the different roles of FSCS, FOS and the FSA.



General FAQs about claiming compensation.

http://www.fme.is/?PageID=282

More Help.

Just Logged on to Icesave to withdraw some money from the regular savings account although I will be reluctantly leaving the bulk of it in their one year bond due to the hassle of getting it out with a solicitors letter etc

People must be withdrawing funds because I didn't notice this statement, pasted below, on their home page last week!

This statement is probably as reassuring as an estate agent saying the market is picking up!

I hope they are sincere!



Our Financial Strength
Being young, and one of the most high profile savings providers in the UK, we are asked our fair share of questions about who we are and whether we provide a safe home for UK savers.

Being a provider that prides itself on being transparent we thought we’d give you the full picture about our parent bank, Landsbanki, so you can make your mind up for yourself. Landsbanki is:



A well-established bank
We were founded in 1886 and have been operating in the UK since 2000, where we employ more than 500 people.



An international financial services provider
We operate across 17 countries and this geographical diversity means that 42% of our lending and 46% of our net operating income for 2007 was from outside Iceland. Our services include retail and corporate banking, investment banking, capital markets services, asset management and wealth management for private banking customers.



Financially strong
We have very strong capital and liquidity levels (amongst the strongest of many European banks) with €8.9billion of liquid assets, over €30 billion of total assets and UK loan assets in excess of £5 billion (as at 31 December 2007). This year we have a debt repayment schedule of just €800m – with liquid assets more than 10 times this repayment schedule we are in an enviable position.

Our current credit ratings, by both Moody’s (A2/P1) and Fitch (A/F1), are strong and imply high credit quality and strong capacity for payment of financial commitments. They are similar to many other financial services providers operating in the UK.



Well funded
Unlike many institutions, we are strengthened by a very high ratio of customer deposits to loans - 70% of all loans are funded by customer deposits. This means that we are not heavily reliant on the wholesale capital markets for funding. To put this ratio in context, HBOS (Halifax/Bank of Scotland) has a ratio of 57.5%, Alliance & Leicester 56%, Bradford & Bingley 60% and Lloyds TSB 72.3%. Just before its crisis Northern Rock had a ratio of 25%.



A careful and prudent lender
We have no direct or indirect exposure to the US sub-prime mortgage market or other structured credit products like Collateral Debt Obligations (CDO’s), Collateral Loan Obligations (CLO’s) and Special Investment Vehicles (SIV’s) that have created losses for many banks. Our operations are also principally focused in Western Europe.



Highly profitable
Unlike many other large US and European banks which have posted profit falls and losses last year, we posted a stable pre-tax profit of €520 million for 2007. This was as high as 2006 despite all the turbulence in the banking sector you will have read so much about.



Well regulated
We are regulated by the Icelandic regulator (FME) in Iceland and the Financial Services Authority (FSA) in the UK. On 7 February 2008, the FME announced that after a routine and stringent ‘stress test’ of the banking system, we are strong enough to withstand severe shocks to the financial system because of our strong levels of capital.



Whilst we are an international financial services provider our head office is based in Iceland. You may find it reassuring to know:



The Icelandic economy is strong
Iceland’s Government enjoys the highest possible credit rating (AAA), with a strong governmental fiscal position. Iceland is the sixth richest economy in the Organisation for Economic Co-operation and Development (OECD) as ranked by Gross Domestic Product (GDP) purchasing power per capita and is a member of the European Economic Area (EEA). Its economy is anchored by industry sectors unaffected by the current worldwide economic downturn, such as food production, technology, natural resources and energy production.



And for your added peace of mind:



You are benefiting from exactly the same level of deposit protection as every bank in the UK
Like savers with any other UK bank, Icesave customers are entitled to deposit protection of up to £35,000 per account holder of all their deposits with us.

The deposit protection is provided by the Icelandic compensation scheme (approximately £15,000) and topped up to £35,000 from the UK Financial Services Compensation Scheme.

In the extremely improbable event of a claim being made under the schemes, the relevant authorities will co-ordinate any claim and will ensure that compensation is paid as promptly as it would be under a single scheme.

As to the statement, if you look its for 2007, so doesn't take into account the 'current problems.'

I phoned the FSCS and the woman on the phone said if IceSave did go down you are covered from £16301 - £35000.

But, you aren't covered if their scheme providers go down. Also, which was a bit annoying, they didn't have their address. It is on the IceSave web site though.

So there you have it.

You'll get just over 50% back on £35k if the Icelandic scheme goes pop.

Not reassuring, but at least you know.

I did actually phone the Icelandic scheme and the operator spoke very good English unfortunately I could quiz any one as the phone rang off the hook.

http://www.fool.co.uk/news/your-money/2008...banks-safe.aspx

Is Saving With Icelandic Banks Safe?

By Jane Baker | 14 February 2008

It's not surprising savers are feeling more nervous than usual over the safety of their cash. The crisis at Northern Rock is still pretty fresh and it's going to take some time before we start to feel comfortable again.

That's why alarms bells ringing in the Icelandic banking sector as a whole may be picked up by savers over here. Especially since there has been a recent press article highlighting this issue.

So what is really happening?
Leading banks in Iceland have had their credit ratings placed 'under review' by ratings agency, Moody's. That's because the banks' profits may fall in the near future. Credit ratings measure whether a bank is able to meet its financial obligations and reflects the risk of default. The review includes Icelandic banks Landsbanki and Kaupthing Bank which operate in the UK.

Both banks currently have an Aa3 rating for bank deposits which means their obligations are judged to be of high quality and subject to very low credit risk. Even though these ratings are on Moody's watchlist for a possible downgrade, Kaupthing has been under review since August 2007 but continues to hang on to its Aa3 rating.

To put this in perspective for you: both banks have a credit rating which is equivalent to, if not higher than, a number of other financial businesses in the UK including Abbey, Alliance & Leicester (who incidentally are also on Moody's watchlist), Bradford & Bingley, ICICI and Standard Life Bank.

Should We Be Nervous?

Icelandic savings accounts have offered eye-watering interest rates in recent times, attracting thousands of UK savers. Indeed, Icesave - owned by Landsbanki - has had a presence in the UK since October 2006 and has already pulled in more than 150,000 savers with its competitive online accounts.

More recently, Kaupthing Edge, the UK arm of Kaupthing Bank, has made an impressive UK debut with the launch of a 12 month fixed rate bond paying a market-leading 6.86% and a highly competitive easy access account paying 6.50%. These accounts are bound to garner popularity with many savers over here.

If you have already put your savings with Icesave or Kaupthing Edge I don't think you should panic. To repeat, both banks have a top-end Aa3 rating. And anyway, just as savings in UK banks are covered by the Financial Services Compensation Scheme (FSCS), deposits held in the two Icelandic banks have equivalent protection.

Icesave savings accounts are covered by the Icelandic Deposit Guarantees and Investor-Compensation scheme. Under Iceland's scheme the first €20,887 (approximately £15,000) is protected in full. But savers also have a further guarantee under the FSCS which is limited to 100% of the first £35,000 less any payments made under the Icelandic scheme.

Meanwhile Kaupthing Edge deposits are currently held by UK company Kaupthing Singer and Friedlander Ltd and as such are protected entirely by the FSCS, which means they qualify for the same maximum protection of £35,000.

So, in other words, these accounts have exactly the same protection as UK deposits.

You might think that a claim made through a two-tier compensation scheme is bound to be more onerous. But Mark Sismey-Durrant, Managing Director of Icesave, suggests this isn't the case since the structure of the Icelandic scheme has the potential to settle claims more quickly than even the UK's FSCS. Indeed, the UK scheme has a full six months to deal with compensation claims (although this process is being reviewed).

That said, the risk of either bank defaulting is exceptionally low. Landsbanki and Kaupthing are the equivalent of the big four banks in the UK. So it would follow that as the Bank of England would come to the rescue of a beleaguered Barclays or Lloyds TSB as the lender of last resort, the Icelandic government would provide similar support for its largest banks.

What's more, Landsbanki has no exposure to sub-prime debt unlike many banks in the UK, and it isn't heavily reliant on wholesale money markets, which means it may be more resistant to the repercussions of the credit crunch than some.

On a final note, I think it's sensible - given credit conditions in general - that you should limit your savings to £35,000 per institution whether you choose to save with an Icelandic bank or, indeed with a UK bank. In other words, don't keep all your eggs in one basket.

In case you guys miss this on the main forum ...........
http://www.housepricecrash.co.uk/forum/ind...showtopic=72027
also look at post 5
I do hope for you guys that your cash is safe .

Anything over £16300 or £15000 (depending on what measure you use is safe up to £35k.

But thanks for the concern, its touching!

Yeah all good here. Icesave instant access money winging it's way through the rickety old BACS to NRK as we speak.

6 month Icesave bond due to mature in June, hopefully it'll still be around to pay my tax bill.

BACS arrive probably tommorow then , do it AFTER the bank holiday to squeeze that bit more

NR , the've sorted that annoying applet .

Thats OK , it was genuine , if you give me your address i'll send you a big bunch of flowers as well

How are things in Uxbridge these days anyway ?

All right mate!

The sun is shinning I'm currently up to my neck in transcribing a qualitative interview I carried out this morning and the inlaws are out of the house.

Its nearly bliss.

In reference to post 5: I'm a bit surprised that Andy Jones caused himself so much trouble when it's far simpler if you just log in and transfer the money out. You can even select CHAPS as an option.



This method is far better on the blood pressure and grey hairs!

I'm 99% sure i've seen this guy post on the forum that he had 500k in Icesave , possibly true as he's mentionend several times he's got a big STR pot , i had about 100k in there at one time and thought that was enough.

Did you bail out of Icesave in the end ?? as i recall you putting up threads about there financial strength .

Now about this Barclays ISA , hmmmm that's a difficult one that , keeping me a wake at night deciding on that one

I do wonder how genuine all this scaremongering about Iceland banks is.
Is there any truth in it or is it just a plot to try and keep British money in British banks?

That was my view in the absence of specific information about the Icelandic banks. What changed my mind was the emergency increase of Icelandic interest rates to 15% last week. That is a definite sign of instability and so while I still have some money in Icesave, I've move the rest out.

It's been observed before but it's worth repeating. I think the Icelandic banks have been on the receiving end of a concerted media campaign. It would be unthinkable for journalists in the likes of the Telegraph and Times to similarly start speculating that your money might not be safe in Alliance & Leicester, Bradford & Bingley or a whole range of other UK banks. No mentions either that ING and the Anglo-Irish banks have the same guarantees as the Icelandic banks. Journalists don't point out that EGG can freeze your account for several weeks to prevent a run on the bank. They'll be the first to crow that they 'broke the Northern Rock story' though. Whether it's a rising or falling economy, the media are most definitely part of the problem. Thank god for HPC.