What if the Bank/Building Society goes bust?

Bitstring , from the wonderful person Alan said

GOOGLE IS YOUR FRIEND.

I am most frightfully sorry I thought this was a finance newsgroup - perhaps we should close all news groups and rely on Google instead?

A

Thanks exactly what I was looking for.

Cheers

A

Personally, I found it to be a pretty frustrating site - requiring you to navigate through numerous links before getting to any information about how much compensation you might get. I got the impression that they hope you'll give up and go home before getting round to claiming!

In message , Alan writes

100% of the first £2,000 and 90% of the next £33,000.

Be aware that C&G are really just Lloyds TSB and that 'being insolvent' isnt the test, the deposit taker has to be 'in default', i.e.bust, which isnt quite the same thing.

But in reality you would likely be OK. Town & Country B/Soc and Leamington Spa B/Soc both effectively and allegedly 'went bust' but the Building Societies Assc and probably the BoE stepped in so that they were merged/taken over (ahem) by Northern Rock & Bradford & Bingley respectively without anybody losing a penny (other than those potential mortgagors whose mortgage offers were withdrawn at the last minute).

If any of the Banks and the B/Soc to which you refer got into difficulty I am sure that 'the system' would step in and prevent it. If that didnt happen then the economic and banking world in this country would be finished and you would be bust too, along with everybody else ( apart from A & C Blair, Downing St, London).

Whilst writing, I am very disappointed by some other regular contributors to this group who have chosen to ridicule your post and who seem to regard this group as a private, elite, domain. If you google back far enough you should be able to find enough ridiculous stuff posted by them in the past which will balance the books. (and I have posted rubbish as well!).

Bitstring , from the wonderful person John Boyle said

If you are referring to me, I don't regard 'Google is your friend' as ridicule. See the old saw about giving fish, vs teaching fishing. You get answers faster, with less effort, by doing some basic research using the tools freely available.

If you weren't referring to me, well, I still don't see anything I'd regard as 'ridicule'.

Not to mention the Broons next door.

So why didn't the system step in to prevent the aftermath of the BCCI debacle? Were they not a "real enough" bank? Were they outsiders too foreign? Would (for example) HSBC be too foreign too (not forgetting that the H and S stand for Hong Kong and Shanghai)?

Jolly good. That's our perogative innit.

In message , Ronald Raygun writes

Good point. I think the main difference was that (with some exceptions) the institutions to which I referred were retail and almost all their clients were domestic. The failures were not due to poor management rather than criminality. BCCI, on the other hand, well er, shall we say some of the aforementioned parameters didnt apply.

Ahh, a bank I know well,,,,,, I am sure they would be safe. a top quartile FTSE 100 company which has always been managed by the English even when based in HK. Even though it earns more dosh externally the old Midland bank (once the world's largest bak) base which it acquired would ensure a BoE led bail out. But I cant see it getting that far, unless our whole economic system had collapsed.

Tooright Mate!

In message , GSV Three Minds in a Can writes

Hmm, possibly my response was a tad vindictive, none the less we should welcome visitors to the group. You were a visitor once as far as I can remember, (as I was once) and I am sure your first visit was not replied to in capitals telling you to get your answer elsewhere. None the less, no offence intended.

Bitstring , from the wonderful person Ronald Raygun said

Too foreign, too big, not enough small punters affected, would be my take.

The collapsed/rescued BSocs have all been fairly 'small beer', and with the majority of the cash coming from the hands of individuals. In those cases the 'take it over' is almost less bother/less outlay than 'pay them all their compensation'.

Has to be somewhat marginal, and suffers from being 'big' too. Individuals would get their protection paid (up to £35k), but I guess the bigger players would have to go whistle, as big comporate/council depositors had to with BCCI.

Bitstring , from the wonderful person John Boyle said

The capitals were unintended for which I apologise. I'm probably a bit peeved since my spam loading has gone up 5x in the last week for some reason, but you're right, no reason to take that out on newbies. However I still suggest a modicum of research first would be much quicker than hoping someone will provide the answers, to what is not an obscure question (heck, I figured out the answer to that before I ever put money in a bank! Of course, the answer was different back then).

Whether there was criminal activity involved or not is beside the point.

The point is they were a properly accredited British Bank and as such ought to have been as safe as houses. I seem to recall (speaking from a Northern perspective) that Western Isles Council had a lot of their reserves tucked away with them, and this meant that they (and therefore indirectly all their ratepayers (or was it poll tax or council tax payers) lost out fairly big time.

Just goes to show that 90% of £30-something k doesn't really go very far.

More to the point, it rather spoils any confidence in your saying that the BoE/govt won't allow any proper bank to collapse when in fact it did allow BCCI to collapse.

We're all doomed, I say.

In message , Ronald Raygun writes

Hmmm,,,, So they should all offer the same degree of risk? and therefore the same interest rate?

Yes and that was against the recommendations of many advisers to local authorities who were keen to point out the relationship between risk/reward. In addition specific warnings for BCCI were issued to local government authorities but the high interest rates seemed irresistible for some reason. None the less, a Local Authority would (quite rightly) be regarded as a corporate or institutional investor. The local voter should remember this.

True. but if there was 100% guarantee then you would get a lower interest rate.

BCCI wasnt a proper bank but its collapse could have been prevented if it had been properly regulated, but then again, I am not sure such that degree of regulation would have been helpful. The odd small bank collapse from time to time in this super nanny, namby pamby, hoity toity, polka dot bikini, consumer association, Watchdog, protectionist, Esther Rantzenist, society might do some good..

Copyright John Lawrie I believe.

Well, either you have a free market or you don't. They should all offer interest rates which are appropriate and compatible with their being as safe as the regulatory regime requires.

Bull. Voters cannot be expected to form an opinion on their council's staff's acumen in matters of where they invest their reserves.

So be it.

It *was* a proper bank or else I wouldn't have been allowed to have one of their Visa cards. When it did collapse, I hoped to be able to get away without paying my card bill, but no such luck.