Who owns who?

Published:: 23 September 2008
Topic:: News,Money,Savings

Before the onset of the credit crunch, you probably wouldn't have thought twice about whether or not your savings were safe - surely a bank or building society is the safest place to put your hard-earned cash - or is it?

The turmoil that's rocking the financial markets around the world has seen Northern Rock and Bradford & Bingley (B&B) nationalised here in the UK, to save them from collapse and an agreed merger between Halifax Bank of Scotland (HBOS) and Lloyds TSB. These are big organisations, we're not talking minnows here, and if they're vulnerable which other institutions could be?

This uncertainty has caused fear among savers, many of whom have pulled millions of pounds out of high street banks and building societies in recent days as they seek safer havens for their money. But is this reaction rational or are savers worrying unnecessarily?

What protection do I have?
If you have your savings with a UK bank or building society it will be registered with the City regulator, the Financial Services Authority (FSA) - many overseas banks which offer products to British savers are also registered with the FSA but if you are unsure, check on the regulator's website (http://www.fsa.gov.uk/). If the firm is regulated, you, the customer, has protection in the unlikely even of that institution going bust.

You are protected by the Financial Services Compensation Scheme (FSCS) which guarantees the first £50,000 you have in savings (£100,000 for a joint account).

However, that protection applies per institution, not per account so if you have more than £50,000 with any one bank or building society it is worth spreading your money around between different providers. And because some institutions operate a number of different brands, you also need to know whether all brands are registered separately with the FSA, or whether there is a single registration for the entire group. If it is the latter, you will only have £50,000 protection across all that institution's brands.

For example, HBOS offers savings accounts under the Halifax, Bank of Scotland, Birmingham Midshires and Intelligent Finance brands as well as providing savings accounts for The AA and Saga, but it has a single registration with the FSA. This means that if you have a savings account with Halifax, and another with Birmingham Midshires, only £50,000 is protected.

Similarly, before the rescue of B&B, savers with an account with B&B and an account with Abbey would have had £100,000 of protection. However, B&B's savings book has been sold to Santander, Abbey's parent company, and the two brands now have a single FSA registration meaning savers only have £50,000 protection in total.

Conversely, Royal Bank of Scotland and Natwest, which are both part of the same group, are registered separately with the FSA so you could have a savings account with both, giving you £100,000 of protection.

For more information on this, read our articles, 'How to keep your savings safe' and 'How safe is your bank?'.

Do any institutions offer total protection?
Yes. The Irish Government has said all retail savings will be fully protected until September 28 2010. With providers such as Anglo Irish Bank and Bank of Ireland, which provides the Post Office's savings accounts, offering products in the UK, an increasing number of savers have been putting their money with these institutions in order to benefit from the extra protection.

Your money is also totally secure if you invest with National Savings & Investments or Northern Rock because they are backed by the Government. However, this protection comes at a cost as their accounts are not paying the best rates. If you want to maximise returns therefore, and have more than £50,000 in savings, it's worth spreading your money between different institutions.

What about accounts from Icelandic banks?

Following the collapse of the Icelandic banks, most Kaupthing Edge and Heritable Bank customers have had their accounts taken over by the Dutch banking giant, ING. Those with Icesave accounts will be compensated through the Financial Services Compensation Scheme (FSCS).

Icesave was signed up to the European passport system, which means that the first €20,887 (about £16,000) will be paid out from the Icelandic compensation system. The FSCS will pay out anything above that up to the £50,000 protection cap. And even though UK savers only officially have the first £50,000 held with a single institution protected, the Government has said it will guarantee anything above that amount held in Icesave accounts.

This means that victims of the collapse of Landsbanki, Icesave's parent company, could therefore be receiving compensation from three sources. However, the FSCS has confirmed that claims will be processed automatically and that affected customers will not have to submit individual compensation requests. The process of refunding savers will begin in the second week of November and the FSCS said most should have received their compensation by the end of November

How can I spread my money around safely?
You need to know who owns who. Here we give a run down of the major savings providers so you can spread your money around and ensure that all of your savings are totally protected:

Provider	Parent company & country of origin	Maximum level of protection
Alliance & Leicester	Banco Santander, Spain	£50,000
Abbey ASDA Bradford & Bingley Cahoot	Banco Santander, Spain	£50,000 (in total)
Akbank*	Akbank N.V, Netherlands*	Netherlands Depositors' Compensation Scheme covers up to €100,000 (about £77,000)
Anglo Irish Bank	Anglo Irish Bank plc, Ireland	All deposits guaranteed by the Irish Government until September 28, 2010
Bank of Cyprus UK	Bank of Cyprus, Cyprus	Central Bank of Cyprus Deposit Protection Scheme covers up to €20,000 (about £16,000) - remainder to be claimed under FSCS up to £50,000
Bank of Scotland The AA Birmingham Midshires Halifax Intelligent Finance Saga	HBOS, UK	£50,000 (in total)
Bank of Ireland Post Office Bristol & West	Bank of Ireland, Ireland	All deposits guaranteed by the Irish Government until September 28, 2010
Barclays Woolwich	Barclays Bank plc, UK	£50,000 (in total)
Barnsley Building Society ‡	Barnsley Building Society ‡, UK	£50,000 ‡
Britannia Building Society	Britannia Building Society, UK	£50,000
Capital One	Capital One Bank (Europe) Plc, UK	£50,000
Cater Allen Private Bank	Banco Santander, Spain	£50,000
Chelsea Building Society	Chelsea Building Society, UK	£50,000
Citibank	Citigroup Inc. USA	£50,000
Close Brothers	Close Brothers Group Plc, UK	£50,000
Clydesdale Bank Yorkshire Bank	National Bank Group, Australia	£50,000 (in total)
Coventry Building Society	Coventry Building Society, UK	£50,000
Egg	Citigroup Inc. USA	£50,000
FirstSave Bank of Nigeria	Bank of Nigeria, Nigeria	£50,000
HSBC First Direct	HSBC Bank Plc, UK	£50,000 (in total)
Icesave	In administration	Icelandic Compensation Scheme covers up to €20,000 (about £16,000) - remainder to be claimed under FSCS up to £50,000
ICICI Bank	ICICI Bank Limited, India	£50,000
ING Direct Kaupthing Edge Heritable Bank	ING Direct N.V, Netherlands	Netherlands Depositors' Compensation Scheme covers up to €100,000 (about £77,000) **ING Direct has taken over Kaupthing Edge & Heritable Bank's online deposit accounts
Julian Hodge Bank	Julian Hodge Bank	£50,000
Kent Reliance Building Society	Kent Reliance Building Society, UK	£50,000
Laiki Bank	Marfin Popular Bank (Cyprus)	Central Bank of Cyprus Deposit Protection Scheme covers up to €20,000 (about £16,000) - remainder to be claimed under FSCS up to £50,000
Lloyds TSB Cheltenham & Gloucester	Lloyds TSB Group plc, UK	£50,000 (in total)
Manchester Building Society	Manchester Building Society, UK	£50,000
Mansfield Building Society	Mansfield Building Society, UK	£50,000
Market Harborough Building Society	Market Harborough Building Society, UK	£50,000
Marks & Spencer Money	Marks & Spencer Financial Services Plc & HSBC, UK	£50,000
National Savings & Investments	Bank of England/HM Treasury	All deposits backed by UK Government
NatWest	Royal Bank of Scotland plc, UK	£50,000
Nationwide Cheshire Building Society* Derbyshire Building Society*	Nationwide Building Society, UK	£50,000 (in total)***
Newcastle Building Society	Newcastle Building Society, UK	£50,000
Northern Rock	Bank of England/HM Treasury	All deposits backed by UK Government
Norwich & Peterborough Building Society	Norwich & Peterborough Building Society, UK	£50,000
Principality Building Society	Principality Building Society, UK	£50,000
Royal Bank of Scotland Direct Line	Royal Bank of Scotland plc, UK	£50,000 (in total)
Saffron Building Society	Saffron Building Society, UK	£50,000
Sainsbury's Bank	Sainsbury's Bank Plc & HBOS, UK	£50,000
Scarborough Building Society†	Scarborough Building Society, UK	£50,000†
Scottish Widows	Lloyds TSB Group Plc, UK	£50,000
Secure Trust Bank	Arbuthnot Banking Group Plc, UK	£50,000
Shepshed Building Society	Shepshed Building Society, UK	£50,000
Skipton Building Society †	Skipton Building Society, UK	£50,000 †
Standard Life Bank	Standard Life Bank Plc, UK	£50,000
Stroud & Swindon Building Society	Stroud & Swindon Building Society, UK	£50,000
State Bank of India	State Bank of India, India	£50,000
The Co-operative Bank Smile	The Co-operative Bank Plc, UK	£50,000 (in total)
Teachers Building Society	Teachers Building Society, UK	£50,000
Tesco Personal Finance	Tesco plc, UK	£50,000
United Trust Bank	United Trust Bank, UK	£50,000
Virgin Money §	Virgin Group, UK§	£50,000 §
West Bromwich Building Society	West Bromwich Building Society, UK	£50,000
Yorkshire Building Society ‡	Yorkshire Building Society ‡, UK	£50,000 ‡

* Akbank N. V. is a wholly owned subsidiary of Akbank T.A.S, Turkey
** ING Direct has taken over Kaupthing Edge & Heritable Bank's online deposit accounts
*** Nationwide is in the process of taking over Cheshire Building Society and Derbyshire Building Society, though both are currently separately authorised with the FSA.
§ Deposits managed by Royal Bank of Scotland under its FSA registration.
‡ Yorkshire Building Society and Barnsley Building Society are in the process of a merger due for completion December 31, 2008. From January 1, 2009, savers with accounts with both providers will only be protected up to a maximum of £50,000 under the FSCS as they will share a single FSA registration.
† Skipton Building Society and Scarborough Building Society are in the process of a merger due to be completed between January-March 2009. After thesavers with accounts with both providers will only be protected up to a maximum of £50,000 under the FSCS as they will share a single FSA registration.

Lloyds TSB and HBOS are expected to retain separate FSA registrations after their merger, so customers with a Lloyds savings account and an HBOS savings account will have £100,000 of protection. Similarly, the takeover of Alliance & Leicester by Spanish bank Santander, will result in A&L and Abbey being part of the same group, but both brands will be registered separately with the FSA.

On September 30 2008, the Irish Government announced it would guarantee all deposits held with financial institutions in Ireland until midnight, September 28, 2010. Anyone with savings in an Irish institution - such as Anglo Irish Bank - now has their savings totally guaranteed.

The above list is not inclusive. For further information visit the FSA website.