Hi,

Yes, keeping it in sterling is the best option for now. The Euro is facing a big test at the moment, and there are signs that the market is becoming nervous about it. Simply put, Europe has too many different economies and some suffer more than others in the bad times. A perfect example is Spain. They need lower rates than 2%, but countries like Germany don't need it lower than 2% (at the moment).

Confidence is a funny thing. Rather than the GBP-Euro rate getting worse after the BOE decision, it actually got better. This is because the ECB didn't make a move, which suggests to people that they aren't willing to do what is needed.

In regards to your savings question, look at some of the safer banks. HSBC and Barclays have fairly little exposure to bad debt, but that could change. I would say those two are the safest banks in the UK at the moment.

I too think the Pound will recover. in fact I had sold my US Dollar holding at $1.39 and it is up 8 cents in 2 weeks. However the recovery won't be quick and straightforward like the last rise and decline (in dollar terms)

Euro / Pound could face some volatility if a country or two decides to desert the Euro as has been hinted.

There are better rates on 1 year fixed bonds but if you deposit money in one of them, I would look to see if your deposit can be withdrawn without notice (ie by paying a penalty on interest) if there are signs of the bank being in trouble.

HSBC do offer lower rates but I would say that is because they don't have as much of a problem as some other banks (paying higher rates) getting savers to put cash in their coffers.

On Sterling deposits, we may see interest rates increasing in around 2 years time if GB and AD don't make too many more mistakes........

Thanks for the response.Yes I did consider your suggestion but the money is in sterling and not euro's and I think the pound will recover given time.HSBC is an option if I can live with the awful rate they are offering.I presume the Isle of Man guarantee scheme is not worth the paper it is printed on.And as far as Guernsey is concerned that is certainly off limits after the Landesbanki fiasco.
Appreciate your input though.

Can you not deposit your cash in Spain where you can keep an eye on it and withdraw it easily, but do split it up between more than one bank. HSBC may be one worth considering if they have a presence in Spain.

I had savings in Isle of Man with A & L but got out after the Depositor's scheme there was shown to be seriously flawed with no funds in the pot to pay out to depositors in failed banks.

With rates so low now, stick to decent size banks and don't let the taxation of interest be a factor.

I live in Spain and am now faced with depositing £100k for a year and somewhere that won't go belly up on me.Anyone any suggestions?