I am looking to invest £500K in some high interest bonds and am looking at spreading the risk. I have just put some in a bond with Bham Midshires and have received info on another bond from Bank of Scotland. When I read the small print, it appears BM is part of Bank of Scotland. I believe its the same with Cahoot and Abbey. If you have money invested with both institutions, would they count as one bank in the event of a problem, ie would you only be covered up to 35K across both accounts?

Its highly unlikely that a big name UK bank like Lloyds would go bust because they are so massive, so I wouldnt worry about investing a bigger amount in say a Lloyds regular saver which offers 5.5% on balences over 100k. ING direct is a massive world wide bank, they offer great bonds at the moment. My sisters husband works for them, although they have lost money in the uk its a drop in the ocean compared to their world wide profits.

So far in the crisis no body has lost any money, even with the Northern Rock and Bearns in the US. I still recommend smaller amounts in icesave & kaupthing as they offer great rates. If you lock into fixed rated bonds, many you are unable to cancel them until the term of the bond expires.