Wednesday, May 16, 2007

ICESAVE credit rating downgraded 3 notches

dnbasa: Moody's lowers bank ratings following refinement of methodology

44 banks got downgraded by Moody due to people losing confidence is Moody's credit rating methodology

ICESAVE (Landsbanki Islands hf) was the worst hit - losing 3 notches

See comments for comparison of banks credit ratings

Posted by sold 2 rent 1 @ 12:09 PM (35643 views) Add Comment


1. sold 2 rent 1 said...

Here is a comparison for Moody's Long term credit rating

HBOS plc Aa2
Halifax plc Aa2
Bank of Scotland Aa2

HSBC Bank plc Aa1
The Royal Bank of Scotland Aaa
National Westminster Bank Plc Aaa
Ulster Bank Ltd Aa2
ICICI Bank Limited Baa2
(Landsbanki Islands hf) ICESAVE Aaa

It looks like HBOS/Halifax/BOS are the safest
ICICI Bank comes out the worst with Baa2.

Inflation may be eating our savings but maybe we should settle for lower savings rates for a more safer bank.

Various credit rating links for UK banks

Wednesday, May 16, 2007 12:16PM

2. Realist said...

Oh yes. This was the as a result of someone pointing out to those genius rating agents that they had managed to give the Icelandic Bank a higher rating than the State of Iceland. Cue rapid backtracking. Same rating agents who will be looking to downgrade all the repackaged subprime rubbish that they rated a while back.

Wednesday, May 16, 2007 12:26PM Report Comment

3. Davros said...

What was the last bank that you know of who went bankrupt?

Wednesday, May 16, 2007 01:17PM

4. japanese uncle said...

This info is highly relevant at this moment. Many thanks.

Wednesday, May 16, 2007 01:27PM Report Comment

5. tyrellcorporation said...

With millions of pounds of savers money headed or already in the Icesave account, the cynic in me (always present!) thinks this is a ruse by the big boys to dis-credit companies that are offering better rates than them. I could be wrong tho...

Wednesday, May 16, 2007 02:01PM

6. paul said...

tyrell I'm with you on that.

And I have to disagree with you JU (the first time ever I think). This is not especially relevant for the end consumer, as all of these banks are governed by FSA rules on retail banking reserves. Just don't keep more than 30k with one bank, because they have to pay 100% of that back if they get into trouble.

Moody's have always taken their own authority for granted but as Realist points out, (and many Japanese banks have pointed out before) credit rating is simple maths, but the maths is caluculated in dollar values and is highly subjective and biased towards US banks.

Moody's is also slow-reactive rather than proactively researching credit status of banks. So it really is best ignore anything they say.

Wednesday, May 16, 2007 02:31PM Report Comment

7. Rickyb said...

Actually you don't get 100% of 30k if the bank runs in to trouble. What you get is currently100% of the first 2,000 of an investor's total shares and/or deposits, and 90% of the next 33,000.

Wednesday, May 16, 2007 02:59PM Report Comment

8. holding out said...

The rule is that they pay 100% of the first 2K and 90% of the next 30K - provided they are governed by the FSA rules which ICESAVE are.

What is the key to the ratings ? There is nothing in the comments.

Wednesday, May 16, 2007 03:00PM Report Comment

9. paul said...

Yes, you're correct holding out.

I read this on the ICESAVE site:

Deposits made with Icesave are protected under the Icelandic Deposit Guarantees and Investor-Compensation Scheme (details of this scheme may be obtained from Payments under this scheme are limited to the first 20,887 (or the sterling equivalent) of your total deposits held with us.

You have further protection from the UK Financial Services Compensation Scheme ( Payments under this scheme are limited to 100% of the first 2000 of all your deposits with us, plus 90% of the next 33,000 of your total deposits with us, less any payments made under the Icelandic scheme. This means that the maximum claim amount as at June 2006 is 31,700.

Wednesday, May 16, 2007 03:03PM

10. paul said...

This is the way you post links:

< a href = " " > Amazon Website < / a >

<a href="">Amazon Website</a>

Wednesday, May 16, 2007 03:07PM Report Comment

11. paul said...

(ignore the one with spaces)

Wednesday, May 16, 2007 03:08PM Report Comment

12. sold 2 rent 1 said...

Paul and Tyrel,

I agree that Moody's reputation is going downhill.

Anyone know why S&P dont rate ICESAVE

Fitch only gives ICESAVE and A compared to Halifaxs AA+

S&P only give ICICI bank a BBB-

The problem with keeping to a 30K limit is that I would have to manage my cash through a dozen bank accounts. That would be a complete nightmare; especially with the money laundering rules that are in place.

When things do go tits up by 2010 I dont fancy having half a dozen compensation claims in to get my money back from the smaller/riskier banks.

JU is right to see the importance of this warning.

Banks that are offering the highest rates are more likely to be involved with riskier investments. That said, a bank offering lower savings rates may also be involved in just as much risk but shafting its savers as well.

Wednesday, May 16, 2007 03:21PM Report Comment

13. japanese uncle said...

What I mean is, that keeping an eye on the financial credibility of banks and building societies is quite relevant as we may be heading towards a period of unprecedented volatility, due to various asset bubbles along with uncertain elements such as hedge funds, private equities, all heavily involved with financial derivatives, which have not yet been tested in history. Personal risk management has never been relevant as now.

Wednesday, May 16, 2007 04:46PM Report Comment

14. Down Wave said...

I realy enjoyed all of your comments above. Thank You. Sometimes, perhaps most of the time, I think that I am the only person on this planet that sees money as money as it has been throughout Human history. For the last 7 years, I have considered that God may have all together changed the rules about money and banks and that I am living in the dark ages.

Wednesday, May 16, 2007 08:15PM Report Comment

15. Down Wave said...

By the way, should you find yourself making a claim for your lost money due to a
bank going down, you will have to join a long chain and perhaps get buried in an unmarked grave
before you got to the top of the list for payment. We not you I mean.

Wednesday, May 16, 2007 08:25PM Report Comment

16. Ozzmosiz said...

Could they just be spinning here? Allow the big banks to get more deposits for lending purposes?

Wednesday, May 16, 2007 10:57PM Report Comment

17. Ozzmosiz said...

Could they just be spinning here? Allow the big banks to get more deposits for lending purposes?

Wednesday, May 16, 2007 10:57PM Report Comment

18. Agentshark said...

ratings reflect what will cost the bank in terms of spread above LIBOR they will have to pay in the money markets to get the funding. high quality banks pay something like 6.1% for 1month money anyways and probably will cost icesave 6.3% ++ . they are just paying retail clients (you and me) a rate that might probably save them a few basis points if they did get same amount from the money markets

Monday, October 1, 2007 10:58AM Report Comment

19. Bajja1934 said...

We all 'happily' deposit funds up to 30K (or 35K if u believe the lying thieving puppet chancellor and the even more untrustworthy puppet master, the PM) But what happens if/when agency ratings are found to be in grave error and FSA, BofE, HMG/Treasury cry foul, guarantee not applicable 'we was mislead'. The moral hazard situation is all around with anything more than the most modest of guarantees generally in place. I suggest it should be reduced to say 25K of even 20K and first charge for bank failure to fall on assets of the Bank Directors personally. Northern Rock mob should not escape with fat accumulations when they directed the risks the bank took with depositors money.

Monday, October 22, 2007 09:37AM Report Comment

20. Jaytt said...

"The moral hazard situation is all around" - this is true, Bajja, and the only way to hope to get some money back is to invest in a bank with political links to the government, sited in a geographical area of its supporters and invested in by floating voters ;-)

Wednesday, December 5, 2007 09:13PM Report Comment

21. Variousdruid said...

Hi Guys,

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Friday, December 7, 2007 12:12AM Report Comment

22. Sid said...

The rate of interest represents the risk attached to the investment. Northen Rock and a few more are offering higher rates. Higher risk?

Wednesday, February 20, 2008 09:34PM Report Comment

23. Joneyjones said...

What worries me about this whole credit crunch thing is that this kind of crisis has not happened before as far as I am aware.
Nobody seems to know the extent of the exposure which banks have to these bad debts. This I feel is the critical issue because
the financial system is based on confidence. If confidence dissipates significantly, could we reach a tipping point when a significant number of banks domino over.
If that happened, would there be any guarantee we would get ANY of our money back , protected or not ?.

Monday, March 31, 2008 01:08PM Report Comment

24. Adeplume said...

anyone got any ideas on how to get back a deposit from Icesave when it's only half way through a fixed term?!!

Tuesday, April 1, 2008 01:57PM

25. Adeplume said...

Is Aa1 better than Aa2 and is that better than Aaa?
Pardon my ignorance!

Tuesday, April 1, 2008 02:00PM Report Comment

26. Adeplume said...

Actually Sid I believe Northern Rock = no risk as it is now guaranteed by the UK Govt?

Tuesday, April 1, 2008 02:02PM Report Comment

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