How Safe Is Money In The Building Society?

[Ordinary Guy]

I have a large amount of cash in my Building Society account. The Halifax as it happens. If/(when) things go belly up here in the UK, is there any danger that any of the Buliding Societies/Banks could go bust!?!

I watch the large financial institutions lending more and more money to people on increasingly flakey grounds ... And then I realised that these are the same people looking after my hard earnt savings!!!

How safe are our life savings?

[The Ayatollah Buggeri]

Didn't the Halifax demutualise into a bank about 10 years ago?

I don't know, but I suspect that savings in a building society are probably safer than those in a bank. But for deposits below £33k, you're guaranteed to get 90% back from the government in the event of a collapse.

[Ordinary Guy]

I don't know, but I suspect that savings in a building society are probably safer than those in a bank. But for deposits below £33k, you're guaranteed to get 90% back from the government in the event of a collapse.

ok, since we are talking about more than double that ... Sounds like I need to open some other accounts with other banks and start spreading my savings about? Will that help or does the Govenment see that as the same thing?

[DEATH]

The government would just print the money up, it's only pieces of paper after all or cheaper still, they'd create some digital entries somewhere for you.

The tax payer and other people holding the currency will get stuffed with the bill through the monetary inflation.

Best spread it about, 33k the most in each account. Stick to building societies as they might convert whilst you wait for the collapse and you get a nice

windfall cheque.

[nic]

ok, since we are talking about more than double that ... Sounds like I need to open some other accounts with other banks and start spreading my savings about? Will that help or does the Govenment see that as the same thing?

You should spread your money around.

For more information:

http://www.fscs.org.uk/files/documents/pdf...vrgmrzmpcyf.pdf

[huw]

Stick to building societies as they might convert whilst you wait for the collapse and you get a nice

windfall cheque.

Or if you're opposed to the looting of these assets by a single generation, then having an account lets you vote against demutualisation (not that it works, given the 'Me Me Me' age in which we live).

In terms of the OP securing his life savings, he needs to consider inflation as well as bank failure. Depending on personal circumstances, index-linked NS&I products might be appropriate, as might precious metals.

[debtfree]

I have a large amount of cash in my Building Society account. The Halifax as it happens. If/(when) things go belly up here in the UK, is there any danger that any of the Buliding Societies/Banks could go bust!?!

I watch the large financial institutions lending more and more money to people on increasingly flakey grounds ... And then I realised that these are the same people looking after my hard earnt savings!!!

How safe are our life savings?

More to the point, is cash safe ?

Long term, cash is constantly losing value, which is not really a very good store of wealth.

You could diversify your cash into other assets.

[Ordinary Guy]

The government would just print the money up, it's only pieces of paper after all or cheaper still, they'd create some digital entries somewhere for you.

The tax payer and other people holding the currency will get stuffed with the bill through the monetary inflation.

Best spread it about, 33k the most in each account. Stick to building societies as they might convert whilst you wait for the collapse and you get a nice

windfall cheque.

Any recommendations for 2 or 3 other Building Societies to use?

[MRMX9]

Any recommendations for 2 or 3 other Building Societies to use?

Many of the remaining building societies have been around since the Crimean war in one shape or form so they are generally pretty solid places for your money. I would certainly recommend Nationwide and the Yorkshire building societies.

Alternatively if you wan't a small local society with massive reserves try National Counties - www.ncbs.co.uk - they do a very good ISA. There are at least 60 societies left - and you never know some of the smaller or medium sized ones might get taken over by the likes of the Nationwide and pay out a small windfall:

There is a full list with weblinks here

http://www.rpoints.com/carpetbagger/societies.php

[bazzzzzzz]

Any recommendations for 2 or 3 other Building Societies to use?

I have considerable savings and have transferred them from the Halifax to National Savings. If you are a higher tax payer you get 9.41% gross on the index linked saving certs.

http://www.nsandi.com/products/index.jsp

To answer your question. In my opinion, (worthless as it may be) banks are unlikely to crash. There's no evidence to suggest we are anywhere near that sort of scenario, or ever will. Ask yourself this question: where's the evidence to support such a contention?

Your savings would appear to be safe.

However. I've spent too much time on forums like this, and spent too much time researching the CDO markets and following events in the US. I am now fearful banks will crash. This fear is irrational , I concede, because it is based on no evidence which could support such a belief. The rumblings in the CDO market and stresses in the global housing market is not evidence to support a notion banks will crash. That's the rational point of view, which I acknowledge.

However, I'm not comfortable with the banking system so I've transferred all my saving to NS&I. Perhaps I've been overly influenced by what a I've read, which tends toward doom mongering scenarios, and perhaps I've lost perspective. At least I'll be earning more interest than with the Halifax, which is a bonus but not the reason why I transferred.

I'm risk phobic when it comes to my savings so I won't invest in the stock market or any assets at the moment because I believe the stock markets and all assets are peaking.

I'll be using these savings to buy a house. Sad as it may seem, 2010 would appear to be the earliest, the way things are going. Sad because in 2004 I was convinced we would be half way to troughing by now and close to long term average prices.

National savings are risk free. If protecting your savings is your main priority I recommend you do the research and see if NS&I is for you.

If your are a higher tax payer and have more than 30K savings, I suggest you act now on the index linked savings certificates. There are currently two issues available (15K x2) one for a 3 year term and another for 5. There will be two further issues should interest rates increase next week.

[crashmonitor]

Didn't the Halifax demutualise into a bank about 10 years ago?

I don't know, but I suspect that savings in a building society are probably safer than those in a bank. But for deposits below £33k, you're guaranteed to get 90% back from the government in the event of a collapse.

As I have said on another thread the compensation scheme is run by the FSA and not the Government through insurance levies charged to all Institutions.I do not believe that if the banking system collapsed the system would cope.In the event of a collapse,you would hope that most of the money would be recoverable from sale of mortgage books.I recently clarified the position that large depostors would not have their funds raids to honour the under 35Ks(robbing Peter to pay Paul)but they confirmed initial distribution of liquidated funds would be distributed pro-rata with the under 35Ks then having recourse to insurance(assuming there is any money left.)

Just goes to highlight the criminal negligence of the MPC that we are having this discussion in allowing M4 to go into orbit and triple house prices .If members were found to be manipulating rates in order to save their BTL portfoios I am sure there would be a case.

Edited June 30, 2007 by crashmonitor

[DEATH]

Any recommendations for 2 or 3 other Building Societies to use?

I have found all these pretty well run:-

www.nationwide.co.uk

www.npbs.co.uk

www.coventrybuildingsociety.co.uk

One for a possible future conversion:-

http://www.hrbs.co.uk/

Hinckley & Rugby BS

Their lending criteria is pretty tight and the LTV ratio they do is low. So their books will be good. If they convert/merge you'll get a bank/BS who has lots of crappy mortgages swallowing them up to make their own books look better!

I actually think it's bad that they convert but it's everyone for themself nowdays!

[huw]

As I have said on another thread the compensation scheme is run by the FSA and not the Government through insurance levies charged to all Institutions.

Thanks, I didn't know that. Do you know if they ring-fence the levies into a compensation pot, or if they use them to buy insurance in the marketplace? If the former, I can hardly imagine it would be enough to absorb any but the most localised bank collapse. If the latter, there's the risk that the underwriters go bust...

The great thing about investments underwritten by governments is that they have tax-raising powers...

[Its time to buy]

hold some hard assets. All this digital money could be vunerable to hackers or terrorists who have access to the internet or a member of staff on the inside.

[dnd]

More to the point, is cash safe ?

Long term, cash is constantly losing value, which is not really a very good store of wealth.

You could diversify your cash into other assets.

yep, if you're holding a large ammount of cash it's 'value' is diminishing daily through rampant double digit money supply

think long term about moving it unto undervalued assets...

Edited June 30, 2007 by dnd

[Belfast Boy]

What about Sainsburys Bank? They don't do mortages. So is a bad crash likely to affect them?

[b0rk]

What about Sainsburys Bank? They don't do mortages. So is a bad crash likely to affect them?

It's a white label HBOS service, everything is ultimately done via HBOS subsidiaries.

Sainsbury's Bank plc is a joint venture with 50% of the share capital owned by the Governor and Company of the Bank of Scotland, a subsidiary of HBOS plc. Sainsbury's Bank plc, St Andrew's Life Assurance plc and St Andrew's Insurance plc are connected companies as the ultimate parent company of St Andrew's Life Assurance plc and St Andrew's Insurance plc also has shares in Sainsbury's Bank plc.

http://www.sainsburysbank.co.uk/savings/in...latory_lr.shtml

Edited June 30, 2007 by b0rk

[Goldfinger]

It's a white label HBOS service, everything is ultimately done via HBOS subsidiaries.

And HBOS must be waist-deep in the mortgage business, I suppose.

[Guest Charlie The Tramp]

I have a large amount of cash in my Building Society account. The Halifax as it happens. If/(when) things go belly up here in the UK, is there any danger that any of the Buliding Societies/Banks could go bust!?!

Don`t worry, in the UK they are all in it together now , one goes bust, the others will all step in to rescue it. Even one going bust could start an Argentinean type panic in the UK banking system, the last thing they want to happen. So they will all see that your money is safe.

[krustie allslop]

I have a large amount of cash in my Building Society account. The Halifax as it happens. If/(when) things go belly up here in the UK, is there any danger that any of the Buliding Societies/Banks could go bust!?!

I watch the large financial institutions lending more and more money to people on increasingly flakey grounds ... And then I realised that these are the same people looking after my hard earnt savings!!!

How safe are our life savings?

New Cross building society had to be rescued from financial collapse around 1984.

Do a search.

[bomberbrown]

Weird. I would have thought that Building Societies would have been more liable to crashing than banks? This is one of the reasons that I took my savings out of ING and put them into NS&I bonds. When ING started doing mortgages, I thought "hang on, this is my money ING are lending out to buy over-valued homes!"

Like Baz says, checkout NS&I. Completely guaranteed by the government and if you're higher rate tax payer, you're getting just over 10% interest gross.

[thedebtisreal]

Weird. I would have thought that Building Societies would have been more liable to crashing than banks? This is one of the reasons that I took my savings out of ING and put them into NS&I bonds. When ING started doing mortgages, I thought "hang on, this is my money ING are lending out to buy over-valued homes!"

Like Baz says, checkout NS&I. Completely guaranteed by the government and if you're higher rate tax payer, you're getting just over 10% interest gross.

Tax free, inflation linked and backed by the government.

What more do you want?

Getting some of that action today, I hope.

[Ologhai Jones]

When ING started doing mortgages, I thought "hang on, this is my money ING are lending out to buy over-valued homes!"

You have heard of the fractional reserve monetary system haven't you?

[bomberbrown]

You have heard of the fractional reserve monetary system haven't you?

Thats exactly what went through my mind immediately after I posted that and I couldn't be arsed to edit/back-track

Glad someone's keeping up at the back there.

[grey shark]

Tax free, inflation linked and backed by the government.

What more do you want?

Getting some of that action today, I hope.

No wait a little longer IF the MPC put up rates this week , NSI usually put the interest rate part of the linked certs 2 or 3 weeks later they do this in the form of NEW issues .

The RPI part of the certs is variable .

The interest part of the certs is FIXED and not variable , so i'm waiting for one more interest rise , then when the next issues come out i'm lumping in , and remember you only need to hold them for 12 COMPLETE months to get the growth .