safe deposit boxes - how safe if a bank fails?

How protected are the contents of safe deposit boxes if a British bank fails?
The FSCS, admittedly on a page that talks in baby language and has a
cartoon of giraffes, defines a "deposit" as
"money placed in a bank or similar institution to earn interest or for safe-keeping"
http://www.fscs.org.uk/news/2015/december/new-year-new-fscs-deposits-limit/
I understand that banks are only looking after the contents of safe deposit boxes on trust, but isn't that the same with deposits in bank accounts?
Harry
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On 30/12/15 18:23, Harold Davis wrote:

Looking at the TSB balance sheet on page 3 of http://www.tsb.co.uk/investors/results-reports/2015-half-year-results.pdf the customer deposits appear on it. To me, that means they aren't on trust. That's consistent with the reasoning that positive bank balances are noted as CR, because they represent creditors on the bank's balance sheet.
On the other hand, I'm not convinced that the bank would even have legal ownership, so I think that both legal and beneficial ownership would remain with you, and there would be no trust, but I could be wrong.
The typical case where you might have a trust situation with a bank is where they were managing stock market investments for you, as a nominee.
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On 30/12/2015 19:44, David Woolley wrote:

A bank's creditors can hardly have any claim on the *contents* of safety deposit boxes, as the contents do not belong to the bank - only the boxes themselves.
--

Paul Hyett, Cheltenham

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On 31/12/15 07:08, Vidcapper wrote:

You have quoted a paragraph of mine describing the handling of interest bearing cash deposits. I believe my second paragraph, which was about safety deposits, agrees with your position.
One probably ought to point out though that the chaos following a collapse may mean that it is difficult to access the box or envelope quickly, and one may be forced into extra costs in order to retrieve it promptly.
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Thanks David. You're absolutely right. Deposits in ordinary bank accounts are loans to the bank, not assets held in trust. I should have remembered that!

Thanks alan_m and Vidcapper. You make it clear.
I'm wondering why many of the high street banks closed or greatly scaled down their safe deposit box services at roughly the same time. Could it be because they didn't want people who fear a bank collapse going in, drawing their money out in cash, and putting it into safe boxes, without leaving the building? Safe boxes seem safer than account deposits, even if many banks do insist that if you want insurance it's up to you to get it. Which is funny really given that in some banks you can hardly stand in front of a cashier without them trying to sell you car or travel insurance.
I think the only major bank that offers safe boxes across the country at the moment is Metrobank, which markets mostly at people who are in debt, but where its safe boxes are concerned many of its clients are people of Indian and other Asian origin who want somewhere to keep their gold jewellery. I've never been in a branch, but the branches I've noticed look a bit fly-by-night and I wouldn't be surprised if their safe deposit boxes look a bit tasty from an armed robber's point of view too.
Harry
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On 31/12/2015 09:56, Harold Davis wrote:

They are a regulated bank so there shouldn't be a problem with deposits up to the compensation limits.
However a safe deposit box is not covered in the same way. The Metrobank terms and conditions (and advertising) say the risk of loss is your risk and you should fully insure the contents.
The Metrobanks I've seen are converted shops so the potential thief will not have to dig into the cellar and then tunnel through metre thick metal reinforced concrete with specialised cutting equipment to get into the vault.
--
mailto: news admac {dot] myzen co uk

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On 30/12/2015 18:23, Harold Davis wrote:

You are just renting a box, hopefully in a secure facility. If the bank goes bust all that you lose is the unused rental of the box.
--
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