Friday, August 31, 2007

or what to do if your bank goes bust

Q&A: Barclays bank lending

I love this ;-) If you are a Barclays' customer (I am - but my savings are spread out elsewhere), you would seriously be panicking that you may never see your money again. Exactly what the BoE was trying to avoid.

Posted by sara @ 05:48 PM (1975 views)
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25 thoughts on “or what to do if your bank goes bust

  • After the first barclays loan I went and checked out exactly how my savings were protected with other banks. I was sure that it used to be protection of 100% up to 25,000 and 90% up to 30K. But I see know that only 2K is protected up to 100% – has this changed or was i just wrong in the first place. I’ve got more or less everything spread around the 25K mark and it was a real hassle at the time with money laundering regs. Does anyone know if there is a way to protect your money if it’s a larger amount in one sum?

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  • It is entirely thinkable.

    It was also preventable.

    Those fantastic profits he is talking about….. income earned at the expense of capital recovery.

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  • I wonder if you can insure your savings? You’re probably better off buying a house!

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  • Sara. I thought someone on here mentioned recently that the limits were higher (I thought slightly higher than your original figures) but I can’t remember who it was. “This is money” says 100% compensation for first £2000 and 90% of next £33,000. So if you have £35,000 in a savings account and the firm goes bust, you will receive £31,700 from the FSCS.

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  • As far as I am aware the only Triple A rated(by Moodys) UK Bank is Lloydstsb. Mind you in the light of the recent failings of credit rating agencies,
    i’m not sure how much faith to put in it.
    National Savings is probably a good alternative place for those seeking diversification, backed by the Bank of England no less.

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  • Who is this insurer btw? and were they basing their assumptions of likely payouts on similar mathematical models of correlation to those people in the credit markets?

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  • Also, how quickly do they pay up, if they can pay up?

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  • I’ve just looked at SAGA’s web site. http://www.saga.co.uk/money/managingyourmoney/savings-accounts-guide.asp

    They remind readers that”there’s no point in getting a fat rate on your money if you never see it again.” They also suggest that National Savings Accounts are the only ones which are risk free then give the same figures I’ve just quoted above concerning compensation from FSCS.

    .

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  • Do they need to sell assets to pay up?

    Or do they just have a chunk of cash in a deposit account

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  • .. and which bank is the deposit account with?

    the Bank of England?

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  • The money is protected by the Financial Services Compensation Scheme It’s a sort of last resorts type facility and I suspect you’d end up waiting ages. Certainly their ‘Can we help’ flow chart doesn’t give you any more hope than this article 😉

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  • … ah yes… i see……… but WHAT is the nature of the fund, its size, WHERE if anywhere it is invested other than in cash? Presumably its cash deposits are with a bank?

    .. interesting stuff.

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  • I dont think Barclays is going bust!! Calm down dears!!!

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  • I gather that the National Savings Premium Bonds have upped the number of prizes which means that they have had quite a lot more money to play with. This is confirmed by their statement about most premium bonds have been bought in recent years. Does this mean then, that people are withdrawing money from the banks and putting it in National Savings instead? Could explain why the banks are having to go cap in hand to borrow cash….

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  • Scary stuff!

    This is a public service announcement….

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  • I’ve got a fair bit in premium bonds already and that does very well 🙂 I am wondering whether government bonds will be safer than high street banks in the short term, but some how the words ‘government and safe’ seem like an oxymoron.

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  • japanese uncle says:

    NS&I’s Cash ISA is one of the most advantagoues, in both IR and terms, which undubted attracted quite a lot of money during the last 12 mos. NS&I also provide indexed bond which pays 1.5%, or else in xcess of CPI (interests payable tax-free), which must be seling like pancakes, precisely meeting the needs of the market.

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  • .. but will any of it exist if there is a problem?

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  • Last time FSCS was tested was in the 1940’s. Gonna be good for present day institutional failure?? We can all only hope.
    If you have a serious worry about our financial system, invest in guns and baked beans. Everyone understands these financial instruments.

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  • NS&I’s indexed link bond pays 1.1% + RPI. RPI is better then CPI.

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  • There is no fund. It’s financed by inflation of the money supply. The BoE will print the money if necessary. If only a small bank defaults, it is manageable and the inflationary effect is small. If a big one fails, the amount of new money necessary will cause noticeable inflation. If many banks fail, hyperinflation will result. In all cases, you’ll be repaid in part, after a long time, and the value of the repayment you’ll get will have lost purchasing power.

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  • sara

    I’m in the middle of swapping my bank cash isa to a NS&I cash isa as I thought it would be safer, dont know for sure though, can anyone shed some light on this subject? Their website states that your money is 100% secure. Hopefully it’s better than a bank isa.

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  • sorry can’t see what the fuss is about the BoE is doing its job to lend as the credit crunch has forced the cost of short term paper so high it makes sense to borrow from the boe to cover the position.You guys have to be joking if you think this means your savings are at risk, maybe i’m not getting the joke, the irony but you are right?

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  • JU. It is better than that. It is the RPI that NS uses for index linked savings – go and have a look. NS recognise a more realistic inflation rate that the BoE.

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  • sara.

    Lumpsums. If you can, have a look at sticking your money off-shore in the Channel Islands or the Isle of Man. They tend to be better diversified outside the UK markets.

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