http://www.dailymail.co.uk/pages/dmstandar...in_page_id=1804


It seems ICESAVE is not guaranteed to pay your money back in the same way as Kaupthing Edge is. Finally an article which has examined the devil in the detail of the FSA guarantee re the likes of ING, Abbey, ICICI and others.

Don't you mean this link?

Indeed, but the guarentee is still there - it is just slightly different. All of the accounts will return your first £35k:

Those registered to give compensation under the EEA scheme as well as the FSA scheme will simply split the refund between them. The first £16,300 will come from the EEA and the rest to add up to the £35k limit will come from the FSA.

Yep, that is the link.

Just the first time I have seen an article looking at what banks have what gurantee and it will no doubt provide some extra reassurance for some knowing which banks have the 'full' FSA guarantee. Recent articles having a go at ICesave should have also been having a go at ING. Odd why they did not?

I'm quite tempted by Kaupthing, but I did notice a rather negative piece ('Why Iceland's market is melting') in this week's[1] MoneyWeek, from which the following precis comes:

"Few countries have enjoyed a rise as meteoric as Iceland's over the past few years. But it could collapse even more quickly, with a 'Northern Rock style banking crisis'. Kaupthing, it's largest bank, is now rated by debt markets as about seven times more likely to default than its European peers."

[1] 15th Feb, Issue 371.

There was an article in MoneyWeek a couple of weeks ago, too (Feb 1st issue) -- 'How safe is your bank deposit?' -- from which the following comes:

"Credit default swap (CDS) spreads measure the premium to the risk-free interest rate that a bank can expect to pay in the market for five-year loans. The higher the CDS, the riskier the market thinks the bank's debt is.

"Riskiest of all the major banks is HBOS. 5.1% is what they have to pay the market for funds.

"Alliance & Leicester and Bradford & Bingley both have five-year CDS spreads that are flashing major warning signs. Both about 6.3%.

"Then there are the foreign banks. If it's ING, it's no worse risk than a UK high-street bank. If it's Irish (especially Anglo-Irish Bank), it's likely to be more of a worry. But if it's Icelandic, then be afraid; these banks are starting to be priced for bankruptcy risk and it's not clear what protection UK savers might have with these foreign accounts.

"Kaupthing is now having to pay 10.2% to raise funds. Kaupthing's 6.5% AER doesn't even come close to compensating us for the risk, I'd say. Glitnir Bank is not much better and even Landsbanki (Icesave) has to pay the credit markets 7.5%.

"Perhaps shopping around for the highest savings rate right now is not the best thing to do, and we should pay more attention to the risk."

I don't know how credible the author (James Ferguson) is, but it's odd that he asserts that 'it's not clear what protected UK savers might have with these foreign accounts' where that generally seems fairly well established.

I think I might need to start looking for some new accounts...

All my money is in risky banks - Icesave, B&B, A&L, some in NR...

Only safe account I've got is NS&I! I was about to start on Kaupthing, but I'm starting to think it could be worth giving that a miss!

What low risk bank still gives a decent return?!!!

People say Nationwide is low risk - so they say.

It's hard not to become paranoid, especially if you're a regular reader of these forums, but it does seem as though savers are covered with all of the banks and building societies up to £35k... British, Irish, Icelandic, Indian...

Even if I only save the minimums required in Kaupthing's two accounts (£1k in their savings account, and £5k in their bond thing) to qualify for the good interest rates, I'm tempted to give them a whirl.

£6k doesn't sound like too much of a risk...

Iceland has a population of less than 300k so there is'nt much money to be made from the locals , so these banks have to play aggresive/risky financial games on the continent ............now there being watched .

A few weeks ago , no one had ever heard of Kaupthing yet there are those that are prepared to stick a large wedge in there , and in this current serious financial instability as well , and for what , a tiny bit of extra interest unbelievable

Iceland ................the norsemen cometh

Check out this google search...
http://www.google.com/search?hl=en&q=%...del+investor%22

Most of his articles at MoneyWeek can be viewed here:
http://www.moneyweek.com/file/219/james-ferguson-.html

My tup'nyworth? I think he's a very good, clear writer. He can translate opaque financial jargon into something meaningful for us mere mortals. He's also rather more bearish on the financial markets of the UK (and US, for that matter) than most. However, I don't subscribe to his "Model Investor" share tipping service due to a dearth of past performance information. FWIW, I think he's worth paying attention to. YMMV.

Regards

It's not a tiny bit of interest though is it. 35k in Kaupthing at 6.5% is earning you 350 quid a year MORE than the same amount in top-paying 'safe' high street BS account at 5.5%. If you also have an Icesave and ICICI account with the same amounts in then its over 1k more in interest per year...

You've tried to massage the figures there to suit your own answer

There are loads of on line accounts paying well over 5.5% , some still over 6% .

Even allowing for your 5.5% safe accounts , your "£350 a year MORE " , is a gross amount , NET for a 20% tax payer £280 for a 40%payer it's £215 plus 3 lost bacs days at least transfering it , then 3 more when you pull out , whats there customer service like ? .....LOL.

You wrote " interest per year " this would imply you hope to keep the cash there for a year , loads of safer banks/BS's have 1 year bonds paying well over 6.00% , against these your Kaupthing would probably be only earning around £50.00 NET more over the year , is it worth the risk of £35,000 for a nifty

If you read the main forum and indeed this thread ,you will see your taking a big risk with this lot , the BOE wouldn't bail out this bank , you might get your compensation after waiting for it , ALSO i stand to be corrected on this but i don't think you would get any interest , just your deposit up to £35,000.

Go on take a gamble with £35,000 and see if you can win a extra £100 net at the most over the year as the credit screw gets tightend even more

The thing is, how much do you trust the FSA, the banks or the N*b who runs the country. Absolutely nothing would surprise me anymore. And why is this the first time this has been mentioned.
I have learnt from Solicitors that you can change anything. Absolutely anything.

Well, if you don't trust the system <i>at all</i> then where are going to put your money?!

Im a bit fed up with this bank dance and will deposit with the NR while the guarantee and rates are good or until the 35k limit is raised on other banks. There must be quite a churn rate as rumours are spread.

Turns out that this article is wrong about Kaupthing. According to a post on the MSE forums in their terms and conditions there is some kind of opt out clause from the FSA guarantee in favour of the EEA guarantee - how many people actually read the terms and conditions when opening the account. Few I guess.

I think you are right tazer - I have run out of either fair IRs or perceived safe banks for my STR pot. Not going near the B&B, Abbey or the likes of ING or Egg. The NR is probably the best place for it now.