ING Direct Picks Up Kaupthing Savings
Another day, another take-over: ING Direct is to buy up £3bn worth of British savings held by Kaupthing Edge and Heritable Bank.
The UK arm of Netherlands-based ING Group, ING Direct UK, has taken over £3bn worth of savings accounts from two Icelandic banks -- Kaupthing Edge, the UK arm of Kaupthing Bank, and Heritable Bank, owned by Landsbanki.
Landsbanki folded yesterday and Kaupthing is in deep trouble this morning. Chancellor Alistair Darling told the House of Commons at lunchtime that the savings accounts operated by Heritable Bank and Kaupthing Edge in the UK have been transferred to ING Direct. This should be welcome news for savers as the credit swap rates for ING suggest that the Dutch bank appears to be safe. Savers with Kaupthing no longer need fret about whether their bank is about to go under.
How are ING accounts regulated?
ING Direct’s customer deposits are safeguarded using a ‘passport’ scheme -- which means that, up to a certain limit, customers’ money is assured by the Dutch government rather than our own Financial Services Compensation Scheme (FSCS).
The Dutch government increased the maximum limit on its savings protection scheme yesterday. As a result, the first €100,000 (approximately £77,700) of ING Direct customers’ savings is guaranteed by the Dutch Investors Compensation Scheme. Effectively, this means that the official level of protection on offer outstrips that from the FSCS (which now offers a £50,000 guarantee).
However, after Alistair Darling’s dramatic announcement this morning that 100% of Icesave customers’ money will be returned to them, I’m not sure theoretical guarantees like this really mean very much in practice. It looks like the Chancellor is willing to compensate all UK savers if they lose money. (Although he hasn't issued a formal 100% guarantee.)
None of the banks involved in the take-over deal are currently willing to comment on the move, or give details of what it will mean for savers.
However, as soon as more information becomes available, I’ll update this article with the news.