Today, Isle of Man is to adopt UK guarantee to savers -but

[milkeybar kid]

 

The Minister went on: ‘However, I am also aware that people both on and off the Island are looking to me for leadership and clarity on the specific actions we intend to take. Therefore I am announcing today that I intend to raise the limit of protection for deposits of individuals to a maximum of 100% of £50,000.

http://www.iomtoday.co.im/news/Manx-Government-increases-savings-protection.4566940.jp

 

But-Compensation is paid out of levies collected from other banks. Levies are collected at a maximum of £250,000 per bank per year at the moment - if they increase that by the same amount as the increase in coverage (333.33%) then the banks would have to contribute a maximum of £830,000 per year. As there are a limited number of banks which pay levies, it may take many years for compensation to be paid to depositors. So nothing really changes. The goalposts move slightly. Smoke and mirrors.

To make it a significant benefit they'd have to increase the levies by a lot more than 333% and/or offer some Govt assistance to actually make it worthwhile. It will be interesting to see exactly how much the banks have agreed to put the levies up by.

This period will also vary according to when liquidation proceeds are collected from the failed bank and how much is recovered. There is no "standing fund" of compensation (i.e. money is not collected before a bank failure). So unless they increase the levies by at least the same percentage you're possibly in a worse situation than when it was £15k. [blink]

[:$]Its taken me 4 hrs to find the info who I am and my password for the forum - hey- ho Mrs MBK

 

 

 

 

[Pickles]

[quote user="milkeybar kid"]

But-Compensation is paid out of levies collected from other banks. Levies are collected at a maximum of £250,000 per bank per year at the moment - if they increase that by the same amount as the increase in coverage (333.33%) then the banks would have to contribute a maximum of £830,000 per year. As there are a limited number of banks which pay levies, it may take many years for compensation to be paid to depositors. So nothing really changes. The goalposts move slightly. Smoke and mirrors.

To make it a significant benefit they'd have to increase the levies by a lot more than 333% and/or offer some Govt assistance to actually make it worthwhile. It will be interesting to see exactly how much the banks have agreed to put the levies up by.

This period will also vary according to when liquidation proceeds are collected from the failed bank and how much is recovered. There is no "standing fund" of compensation (i.e. money is not collected before a bank failure). So unless they increase the levies by at least the same percentage you're possibly in a worse situation than when it was £15k.[/quote]

My suspicion would be that if they need to pay out more than the levy has brought in, then (some? all?) the additional costs will be charged to the remaining banks, with perhaps a contribution from the taxpayer. Based on what has happened in the last few weeks, I would really not want to stare too hard at ANY of the deposit protection schemes: if you prod them, they may disintegrate. It's all about confidence - and praying that they never need to be called into use ...

Regards

Pickles

[maconnaisemaconnaise]

The Nationwide International site says:

How safe is my deposit?

Nationwide International is the wholly owned subsidiary of Nationwide Building Society. As well as the statutory protection provided by the Isle of Man Depositors' Compensation Scheme, Nationwide Building Society guarantees the liabilities of its subsidiary. We believe this ‘double protection’ provides peace of mind for even the most cautious investor.

[Chancer]

Unless something has already been decided and implemented for those that have lost everything in Kaupthing IOM it may already be too late to stop a run on the remaining IOM banks before the protection levy is incurred.

[Scooby]

The ODT's of UK mutuals should be safe - the issues facing the banks are not the same as those facing the mutuals.  The mutuals have much lower dependancies on the wholesale markets, lower arrears levels and are not subject to the vagaries of the stock markets...