Finance News

Savings in European-based banks

Savers with deposits in some foreign banks operating in the UK were this week given a sharp reminder that, in the unlikely event of a bank defaulting, they would not be entitled to the maximum £35,000 compensation payable to savers with UK banks.

Savers with certain European-based banks would first have to seek compensation from the deposit guarantee scheme operating in the bank's home state. Only after gaining the maximum available from that scheme could they apply to the UK scheme for a top-up to the £35,000 level. Savers with other European banks would not be entitled to any top-up compensation if their bank had not signed up and contributed to the UK scheme.

In evidence to the Treasury Select Committee on Wednesday a spokesman for the Financial Services Compensation Scheme (FSCS), the UK scheme, said 12 banks based in the European Economic Area (the 27 EU countries, plus Iceland, Norway and Liechtenstein) had signed up for the savings top-up.

They were: Bank of Ireland, Anglo Irish Bank, Merrill Lynch International Bank (from Ireland), TD Waterhouse Bank, ING Direct, Triodos Bank and Akbank, Bank of Cyprus and Marfin Popular Bank (a.k.a. Laiki Bank), Landsbanki Islands and Kaupthing Bank and Fortis Bank.

Savers with these 12 banks would, in the event of a default, seek initial compensation from the schemes operating in the bank's country of origin. For example savers with Landsbanki, which holds more than £5 billion of UK savers' money, would first apply to the Icelandic Depositors' and Investors' Guarantee Fund, which covers the first £16,500 of deposits. Only after receiving that would they be entitled to seek a top-up from the FSCS, with a maximum payout of £18,500 to bring them up to the FSCS

Source: Thimes
Date: 01.08.2008 [ID: 180]

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