Is your money safe with a bank you've never heard of?

Updated on 04 December 2012 | 2 Comments

If you're looking for a new savings account you'll find there are some unfamiliar names at the top of the best buy tables: Danske Bank, the State Bank of India, Triodos and United Bank, among others. Who are they and are they a safe place for your cash?

Fixed rate savings bonds is one area of the savings market which has seen a number of colourful new names at the top of the best buy tables this year.

When it comes to the best rates in the one, two, and three-year bond market there’s not a high street bank in sight. Instead accounts from United Bank UK, the State Bank of India, the Bank of London and the Middle East, the Islamic Bank of Britain, Triodos Bank and First Save dominate the tables.

As the names suggest, many of these banks are subsidiaries of overseas banks which may make savers nervous of handing their cash over to them.

The Financial Services Compensation Scheme

In the UK the Financial Services Compensation Scheme (FSCS) is there to protect UK savers in the event that a bank or other institution goes bust.

The FSCS protects all UK-regulated deposits up to £85,000 per person per institution or £170,000 for a joint account. The scheme is an independent fund set up by UK financial bodies and regulated by the FSA.

To put savers’ minds at rest I’ve checked out whether the current best buy savings providers are covered by the FSCS or similar foreign schemes, as well as the history behind the big players in the savings market at the moment.

United Bank UK

United National Bank, trading as United Bank UK, was formed in 2001 from the merger of the UK branches of two Pakistani banks, United Bank Limited and National Bank of Pakistan, who had both been operating in the UK since the mid-1960s.

United Bank specialises in Islamic banking products, but also has some traditional savings accounts including a one-year bond at 2.75% and a two-year bond paying 2.85%.

It has branches in London, Birmingham, Manchester, Glasgow, Ilford and Bradford and is a member of the FSCS.

State Bank of India

The State Bank of India (SBI) is the largest commercial bank in India in terms of assets, deposits, profits, branches, customers and employees. The Government of India is the single largest shareholder of the bank which has 173 offices in 34 countries across the world.

It has some pretty decent savings rates including a two-year bond at 2.9% and a three-year bond at 3.25%. It’s a member of the FSCS so your savings are safe up to a limit of £85,000.

The Bank of London and the Middle East

The Bank of London and the Middle East (BLME) is a Sharia-compliant bank based in London. Due to the Sharia-compliant nature of the bank’s principles, interest is referred to as “profit”.

The largest Islamic bank in Europe, BLME received FSA authorisation in July 2007.

It’s currently offering a three-year bond at 2.95% but you’ll need to have a decent amount of savings to open an account – the minimum deposit is a massive £25,000. The good news is your money is protected up to £85,000 by the FSCS.

Islamic Bank of Britain

The Islamic Bank of Britain is another bank offering Sharia-compliant accounts. Established in September 2004, it was the first Islamic bank to receive FSA authorisation and is covered by the FSCS up to £85,000 per person.

It’s currently offering a two-year bond paying 3.03% with a minimum deposit of £1,000.

Triodos Bank

Triodos was set up in the Netherlands in 1980 and has been operating in the UK since 1995. It makes much of its green and socially responsible credentials, stating its mission “is to make money work for positive social, environmental and cultural change.”

Unlike the other banks discussed in this article, Triodos is covered by the Dutch deposit guarantee scheme, rather than the FSCS, up to €100,000 (£80,000).

Under the international 'passport' compensation scheme, savers would receive compensation from the Dutch scheme in the unlikely event of the bank's collapse, something which may put people off.

Current product offerings include a two-year bond paying 2.75% and a three-year bond paying 3.25%.

First Save

First Save is part of FBN Bank (UK) which is a wholly owned subsidiary of First Bank of Nigeria. The bank describes itself as the London bank for Nigerians and also operates in other West African countries.

Given that Nigeria’s banking and political systems have been widely deemed corrupt, savers might have their doubts about saving money with the bank.

However, it’s regulated by the FSA and deposits are protected by the FSCS. So, despite its links to a country with a corrupt regime, in theory it’s just as safe as any other UK bank.

Current products from First Save include a best buy two-year bond at 3.05% and a six-month bond paying 2.62%.

Danske Bank

Another newcomer that has briefly topped the best buy tables is Danske Bank.

The bank is better known to customers in Northern Ireland as Northern Bank but, in a rebranding exercise completed last month, it’s now trading under the name of its parent company, Danske Bank Group. Danske Bank Group is the largest finance group in Denmark.

UK deposits with Danske are covered by the FSCS. Its fixed term deposit accounts require a minimum of £5,000 and current products include a one-year bond paying 2% and two-year bond paying 2.65%.

More on savings:

The best instant access savings accounts

The best regular savings accounts

Premium Bonds winners

The best notice savings accounts

Lovemoney Awards: First Direct is your favourite savings provider

Top savings accounts for kids!

The top fixed rate savings bonds





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