Who owns your bank or building society?
With money markets in turmoil, it pays to know exactly who owns the banks and building societies you save with.
Last week, Prime Minister David Cameron reassured the British public that their savings are safe. He said: "People should know that British banks are well-regulated and well-capitalised."
Then again, how right is the PM? Is your cash on deposit absolutely, guaranteed, 100% safe in British banks? That very much depends on where you keep your nest egg!
Lessons from the Rock and B&B
When building-society-turned-bank Northern Rock got into financial difficulty in mid-September 2007, savers queued outside its branches for hours to withdraw their life savings. This caused a run on the Rock -- the first run on a British bank since the collapse of Overend, Gurney & Co. in 1866.
As a result, the Government stepped in to provide a state guarantee for 100% of all savings in Northern Rock. This state support stopped the 'Rock run' almost overnight. Even so, Northern Rock was fully nationalised in February 2008, followed by Bradford & Bingley in September 2008.
The UK's safety-net for savings
Thanks to the near-collapse of some of Britain's biggest banks, the Government beefed up the Financial Services Compensation Scheme (FSCS), the state-supported safety-net for savers.
Today, the FSCS guarantees 100% of the first £85,000 of cash savings per person per institution (including interest). Therefore, a couple with up to £170,000 in a joint account has all of this cash covered by the FSCS.
From August banks, building societies and credit unions will need to set out posters and stickers across their branches and websites to highlight the protection offered by the FSCS and other deposit schemes.
Who owns whom?
To help you work out how safe your cash is I've compiled a list of the biggest British savings providers, showing you who owns whom.
With hundreds of different institutions (some tiny and obscure) to choose from, I haven't listed them all here. Instead, I've concentrated on the UK's biggest brands in banking and saving.
You get only one lot of £85,000 of FSCS protection (per person) for the total amount you hold in these savings providers:
Britain's biggest banks
1. HBOS (Halifax/Bank of Scotland group)
- Bank of Scotland
- Birmingham Midshires
- Intelligent Finance
2. Lloyds Banking Group
- Cheltenham and Gloucester
- Lloyds TSB
- Standard Life
- First Direct
5. Royal Bank of Scotland (RBS)
Please note that RBS subsidiaries NatWest, Ulster Bank and posh bank Coutts all have their own, separate banking licences and are not covered by this RBS licence. So £85,000 with RBS and the same sum with NatWest, Ulster Bank and Coutts would be covered for four times £85,000 (£340,000) by the FSCS.
6. Santander UK
7. The Co-operative Bank
- Britannia BS
- The Co-operative Bank
8. Bank of Ireland UK
- Bank of Ireland UK
- Post Office
9. Yorkshire Bank
- Clydesdale Bank
- Yorkshire Bank
Also, note that Sainsbury's Bank and Tesco Bank both have their own banking licences and each enjoy the full £85,000 FSCS cover.
In January, Virgin Money bought the savings arm of Northern Rock. Right now, these have separate licences, but these will merge into one later this year. So if you have savings above £85,000 across these two, then you should move the excess elsewhere.
Britain's biggest building societies
10. Nationwide BS
- Cheshire BS
- Derbyshire BS
- Dunfermline BS
- Nationwide BS
11. Yorkshire BS
- Barnsley BS
- Chelsea BS
- Norwich and Peterborough BS
- Yorkshire BS
12. Coventry BS
- Coventry BS
- Stroud and Swindon BS
13. Skipton BS
- Capital One
- Chesham BS (renamed Skipton BS)
- Scarborough BS (renamed Skipton BS)
- Skipton BS
Four foreign banks not covered by the FSCS
Some European banks accept British savings, but are not covered by the FSCS. Instead, under what's called the 'savings passport' scheme, some banks from the European Economic Area are covered by their home country's compensation scheme for savings.
Personally, I wouldn't trust these foreign safety-nets to fully protect Brits' savings, as politicians always put their own citizens first. I'd be wary of keeping large sums in these four Euro-banks, regardless of the Europe-wide savings compensation limit of €100,000:
- Anglo-Irish Bank
- Bank of Cyprus
- ING Direct
- Triodos Bank
Three providers with Government backing
Following bailouts using public money, the UK Government has an 82% stake in RBS and a 40% share in Lloyds Banking Group. Given this public ownership, I suspect that the Government would cover all deposits held by these banks and their brands (until they are re-privatised, of course).
In effect, all deposits in these two banks are protected by an implicit government guarantee (and its AAA credit rating), but this will be withdrawn one day.
Finally, the Government's own piggy bank, National Savings & Investments (NS&I), is also covered by the FSCS. However, I expect the Government would cover all deposits in NS&I, apart from in the severest of financial meltdowns.
More on the economy: