Brave move......... or foolish

[Bugsy]

Dear Alistare has given 100% guarantees to British savers with money in Icelandic banks.

Possibly good news for any of us with savings abroad but it could go badly wrong, couldn't it.

[Chancer]

Can you tell me more or give a link to the current situation Gary.

I have recently moved all my remaining dosh to an Icelandic bank and have a very hollow feeling in my stomach at the moment to find that their shares have been suspended.

I dont have much, and it is all I have to survive on and continue renovation but still too many eggs in one basket [:(]

[Hoddy]

Here's a link to the news story JR -

http://news.bbc.co.uk/1/hi/business/7658417.stm

I'm not sure how it would apply to a Briton resident in France though.

Hoddy

[mint]

This smacks of all sorts of unpleasantness to me.

When the Indian-based bank BCICI collapsed, thousands (perhaps hundreds of thousands, I don't know the exact numbers) of Asian shopkeepers lost a lot of money and there was no question of any of the poor b u g g e r s being compensated.

Now, of course, this is a Western bank, so we'd better not let depositors suffer, had we?

Other point is (and this has nothing to do with my lack of sympathy for individuals like poor JR; I'm talking about the essense of the matter here), these depositors have chosen to go with this bank in order to obtain a better return.  Surely then, they knowingly risked their own money, so where does the government come in?

It's always been a tenet of investing that the higher the returns, the higher the risks, is that not the case?

Last point, how many other British depositors of banks based in other countries than the UK , will be compensated by the UK government should their banks go bust?

I wonder how much money the British government can afford to "pump" (their word, not mine) into all these banking disasters?

BTW, I hope all of your money is indeed safe, JR.

[Chancer]

Thank you Sweet17, it looks like my "virtual stash" may now on its way to ING, the same company that nearly broke me when as my major client Nick Leeson took them down, luckily I had irons in other fires at that time.

Yes I was tempted by the higher rate offered and knowingly took the risk so as in all things I will/may face the consequences, I held out for a long time and only took the plunge last month, I  made a gain of around £60 in extra interest which did not cover the costs and loss of interest during the transfer, but would have done in the long term.

So if I  get to see my money again it will be stashed under a mattress, if not it looks like an rapid return to paid work for me.

Very very frightening following the world financial news this morning, bank shares up and down by around 50% in some cases, banks nationalised or part nationalised, Russia lending 500 billion to Iceland than closing their own stock exchange, I dont want to continue.

 

[mint]

The worst of it is, JR, we don't really understand why these things are happening and who exactly is to blame.

There will do doubt be a lot of suffering out there and I do hope very much that you are not going to be adversely affected.

Let's hope you get your money back sooner rather than later, eh?

[Nell]

I hope all our monies are safe... I don't know about others, but my OH and myself worked hard for what we have and the thought of some "financial wizard" playing games and gambling with our money makes by blood boil.

As for S17's comment about investing for higher returns - Yes I would probably agree if JR had put his money into a dodgy share market, hoping to make a fast buck, but putting money into a common savings account should never be classed as higher risk !! Icesave accounts and the like, pay around 5-6% gross. Savers don't particulary make lots of money on these investments, all we do is try to keep up with inflation.

I don't think the blame here lies with the saver, it lies at the door of all those greedy individuals who "buy now - pay later" - Oh except they forget to pay [:@] - So if you think about it the Government is not bailing out savers, it is paying off the debts of those who overspend and decide to "walk away" from their negative equity houses, expensive cars and overstretched lifestyle. 

[Chancer]

I dont think my money has actually dissapeared yet and if I wanted to join a run on the bank I could probably get it out intact but to put where, other than the mattress?

When I was younger and  had no money I never had any money problems [:)]

Luckily I am still young in mind and body, I am able and happy to do manual work for a living in multiple trades (except financial thank god) if the global meltdown continues the worst case scenario for me would be  a return to happier less worried times.

I feel for those who owe lots of money and of course the pensioners who no longer have the options that I do.

[AnOther]

I think the biggest problem is the feeling of impotence. As mere pawns in the game we have little option but to watch from the sidelines as others, who for the most part are either wealthy or looking forward to gold plated government pensions, run around like headless chickens.

I guess though that I'm more fortunate than some in that I'm in a well paid job, which is also probably as secure as they come at the moment, so the nett effect on me is a frustrating delay to my retirement.

[Chancer]

I just heard from the chancellors lips in the house of commons that Kaupthing went into liquidation within the last hour, the same hour that I was prevaricating about joining the run on the bank [:(]

Savers like myself with Kaupthing Edge which was in fact a British banking institution "should"  be protected as he said that "most" of the deposits/funds/assets (I wish I could recall his exact words) will be transferred to ING.

Its all happened rather too quickly and in some ways I wish that I hadnt turned on the computer today, it is good to see though that governments including the british have reacted quickly to this dramatic turn of affairs, I am sure that there is a lot more to come.

It does leave me with a "short term liquidity problem" as these people like to call it.

[mint]

So then, if the British government can guarantee the savings of depositors in a "foreign" bank over and above £50 000, why then do savers with British banks NOT have this guarantee extended to their savings as well?

What message does that give out to everybody?  You're better off taking your money outside of the UK and, if it all goes belly up, you'll be OK nonetheless?  I think not.

And, Nell, I did say my remarks were not personally directed at anybody, only at the principles of how things are.  In my book, higher return equals higher risks, period.  No exceptions.

How do you think some financial institutions are able to offer better rates than others?  Isn't it because they take greater risks with "our" money?

You will not find anywhere where I have said that people "deserve" to lose their money; nowhere do I say that people shouldn't go for higher returns.  All I've said is that the one "nasty" consequence of perhaps losing your money follows the other "nice" effects of higher returns in an inevitable sequence.

I have made no distinction about "hard-earned" money or money come by in a dodgy way:  all I said was that if you seek a higher return than the "average", you must be prepared to at least examine how the institutions involved are able to do this.

Buck the trend, yes, but the operative word here (and excuse the pun) is "buck".

[Pierre ZFP]

[quote user="sweet 17"]

So then, if the British government can guarantee the savings of depositors in a "foreign" bank over and above £50 000, why then do savers with British banks NOT have this guarantee extended to their savings as well?

What message does that give out to everybody?  You're better off taking your money outside of the UK and, if it all goes belly up, you'll be OK nonetheless?  I think not.

[/quote]

I don't think that was quite the deal.  I understood it to be that HMG would top up to £50 000.  ie cover any shortfall if a particular country only covered a part of that, definitely not over and above.

Having said that, where is all this money coming from?  The chancellor said he couldn't even restore the 10% tax band as there was no more money in the pot so the alternatives are:

Print more money - rampant inflation

Tax more - rampant stagnation

Raise interest rates - ditto

Increase PSBR - err well no

Anything else? Sell the Isle of Wight?

[Chancer]

I have been listening carefully to the syntax used by both then PM and the chancellor and I dont think that they are going to guarantee anything other than to cover the first €20k reneged on by Iceland and to then top that up to the £35k or is it now £50k Uk guarantee.

The words were something like "no British savers should suffer as a result of this situation in Iceland"

Call me cynical but................

Good to see that there was a global co-ordinated reaction with the 0.5% base rate reduction announced simultaneously at midday, but remeber that this is just one hiccup on one day brought on by the initial run on just one overstretched bank in a relatively (globally speaking) small economy.

U.S. base rates are now at 1.5% I believe can they really afford to do this? what about tomorrow or the day after?

[Bugsy]

His actual words on BBC this morning were "100% cover"

[Chancer]

[quote user="Bugbear"]His actual words on BBC this morning were "100% cover"[/quote]

I think that you will find that he was actually referring to the bank directors forthcoming annual bonuses [:D]

[Cat]

Like the luxury holiday the AIG big cheeses went on just days after declaring bankruptcy?  http://news.yahoo.com/s/ap/20081008/ap_on_bi_ge/meltdown_aig

Who paid for that then [:$]

[Hagar]

[quote user="Pierre ZFP"]

Having said that, where is all this money coming from?  .....................

.........

Increase PSBR - err well no

[/quote]

Err well yes actually. The PM stated that quite clearly in his press conference this morning.

Basically a geared investment and a huge gamble - if it works GB will be the hero of the day. If it doesn't then he (and most of british industry) will be in the mire.

rgds

Hagar 

[mint]

Re the "100% cover", JR said this:

I think that you will find that he was actually referring to the bank directors forthcoming annual bonuses

JR, I'm pleased to see that you haven't lost your sense of humour, whatever else you might have lost!

No, not a real joke, I'm just worried like everybody else.................[:(]

[Chancer]

Well Sweet17 you have just got to feel sorry for them havn't you?

After all they stand to lose far more from Santa this year than the value of my life savings that I gambled with them.

Its the story of my life, "lack of research" as I now am finding press articles warning of this back in February of this year.

You win some and you lose some, moving to France was an equally unresearched gamble which has paid off to date.

[Sunday Driver]

Here's some quick research:

From today's Telegraph:

How safe is your bank?

HSBC

How safe for savers?

The only one of the big banks which has deposits worth more than its loans. No funding gap and absolutely rock solid. It is the world's largest bank and if you had to bet on your money being safe in one place, it would be with HSBC.

How safe for shareholders?

As other banks watch their share price tumble HSBC goes from strength to strength. Despite the bank's exposure to the sub-prime mortgage crisis in the US, its shares appear to be on track to escape unscathed from the financial crisis.

 

LONDON, Oct 8 (Reuters) - Europe's biggest bank HSBC Holdings said it had no plans to use a UK government offer to recapitalise as it can keep a strong capital position through its own resources.

'HSBC has no current plans to utilise the UK recapitalisation programme initiative announced today. We do agree to observe the tier 1 capital requirements, but we will do this through our own resources,' a spokesman said.

HSBC has one of the strongest capital and liquidity positions in the industry, with a tier 1 capital ratio of 8.8 percent and a loans/deposits ratio of 90 percent.

 

I declare an interest here - they pay my pension....[:D]

 

 

[Cat]

So I just had to go check on my bank, other may also be interested  http://www.telegraph.co.uk/news/3153858/How-safe-is-your-bank.html

[DerekJ]

The Icelandic can of worms opens up even more exposures

These are likely to be well above the £50k.

[Benjamin]

When Alistair Darling pre-announced that HM Government would be changing the compensation level to £50,000 per individual he said that this move would cover 98% of depositors so in the UK we're only talking about the 2% who will not get full compensation in the event of a failure. The way some of these postings are going I think all of that 2% are members of this forum.  [:D]

[Gastines]

Glad I stuck with HSBC. I did get a panic on when the max cover was £35k per person per bank.Now it's £50K and it has also paid off to have a joint account. I did contact HSBC about any perceived problems and after 2 weeks got a reply," No problems"!!! It seems to have been a hugely manipulated exercise and for me, not the brightest button as has been pointed out on here many times, where did all the cash originally disappear to,apart from Lehman 's directors salting away dollars171K?

[Bugsy]

"Dear Alistare has given 100% guarantees to British savers with money in Icelandic banks".

Icelandic Banks !!