Following requests from MoneySuperMarket users, we’ve updated this article which explains where we would stand if the worst happened and an institution went bust. Are we protected? And to what extent?
To reassure and protect savers and investors, the Government has established the Financial Services Compensation Scheme (FSCS). Under the terms of this scheme, the first £85,000 per person that is held with a single institution is totally guaranteed (£170,000 for joint accounts). For more information on this and advice on how to keep your savings safe, read our article 'Who owns who?'.
One measure of an organisation's financial well-being is the ratings given to it by credit rating agencies. Over the past few years, a number of financial entities have seen their ratings trimmed back, reflecting uncertainty over their long-term health.
The table below also shows the ratings given to the country's major savings providers by the three main ratings agencies, Moody's, Standard & Poor's and Fitch. This information is correct as at January 23, 2014.
How are institutions rated?
As you will see from the table below, the agencies vary in the way they present their ratings. However, broadly speaking the purpose of their rankings is to evaluate the financial strength of the institution based on its ability to meet its financial commitments. And they all rate strength in a similar way – an A-rated company is deemed to be stronger and less risky than a C-rated institution.
These ratings are usually used by institutional investors; they can be very confusing for the consumer. However, given the current crisis, if you want to learn more about how your bank is rated, we've compiled a table to help you.
- The highest rating is AAA.
- Moody’s uses numbers as well as letters. The number ‘1’ after a letter symbolises a stronger company than a number 2 or 3.
- Fitch and Standard & Poor’s, on the other hand, use plus and minus signs after the letters.
- A triple rating (AAA, BBB, CCC etc) of the same letter is always better than a double rating (AA, BB, CC etc), regardless of the number or plus/minus symbol that comes after it. For example, BBB- is a better rating than BB+. But an A- is a better rating than a BBB+.
The table below shows the ratings awarded by the three main ratings agencies. Please note that the agencies don't rate all providers.
|Provider||Parent company & country of origin||Maximum level of protection|| Rating: |
| Rating: |
| Rating: |
Standard & Poor’s
| Santander |
Alliance & Leicester
Bradford & Bingley
|Banco Santander, Spain||£85,000 (in total)||A (for Santander UK plc)||A2 (for Santander UK plc)||A (for Santander UK plc)|
|Anglo Irish Bank||Irish Bank Resolution Corporation||€100,000 (about £85,000) will be guaranteed under the Irish Deposit Guarantee Scheme. Remaining amount covered by the Irish Government's Credit Institutions (Eligible Liabilities Guarantee) Scheme 2009||BBB (for Irish Bank Resolution Corporation)||-||-|
|Bank of Cyprus UK||Bank of Cyprus, Cyprus||£85,000||-||Ca||-|
| Bank of Scotland |
|Lloyds Banking Group, UK||£85,000 (in total)||A (for Lloyds Banking Group)||A2 (for Lloyds Banking Group)||A-(for Lloyds Banking Group)|
| Bank of Ireland |
Bristol & West
|Bank of Ireland, Ireland||€100,000 (about £85,000) will be guaranteed under the Irish Deposit Guarantee Scheme. Remaining amount covered by the Irish Government's Credit Institutions (Eligible Liabilities Guarantee) Scheme 2009||BBB (for Bank of Ireland)|| |
Ba1 (for Bank of Ireland)
| Barclays |
|Barclays Bank plc, UK||£85,000 (in total)||A (for Barclays Bank plc)||A2 (for Barclays Bank plc)||A (for Barclays Bank plc)|
|Britannia Building Society *||The Co-operative Bank plc, UK *||£85,000 *||B (on the Co-operative)||Caa1(on the Co-operative)||-|
|Capital One||Capital One Bank (Europe) plc, UK||£85,000||-||-||-|
|Chelsea Building Society||Yorkshire Building Society, UK||£85,000||BBB+ (on Yorkshire BS)||Baa2 (on Yorkshire BS)||-|
|Citibank||Citigroup Inc. USA||£85,000||A (on Citigroup)||A2 (on Citigroup)||A (on Citigroup)|
| Clydesdale Bank |
|National Bank Group, Australia||£85,000 (in total)||-||Baa2 (on Clydesdale Bank)||BBB+ (on Clydesdale Bank)|
|Egg||Yorkshire Building Society||£85,000||BBB+ (on Yorkshire Building Society)||Baa2 (on Yorkshire Building Society)||-|
| HSBC |
|HSBC Bank plc, UK||£85,000 (in total)||AA- (on HSBC Bank plc)||Aa3 (on HSBC Bank plc)||AA- (on HSBC Bank plc)|
|ICICI Bank||ICICI Bank Limited, India||£85,000||BBB-(on ICICI Bank India)||Baa3 (on ICICI Bank India)||-|
|ING Direct||Barclays||£85,000||A (on Barclays)||A2 (on Barclays)||A (on Barclays)|
|Laiki Bank||Marfin Popular Bank (Cyprus)||Cypriot Deposit Protection Scheme covers up to €100,000 (about £85,000)||-||-||-|
|Leeds Building Society||Leeds Building Society, UK||£85,000||A-||A3||-|
| Lloyds TSB |
Cheltenham & Gloucester
|Lloyds Banking Group, UK||£85,000 (in total)||A (on Lloyds Banking Group)||A2 (on Lloyds Banking Group)||A- (on Lloyds Banking Group)|
|Marks & Spencer Money||Marks & Spencer Financial Services plc & HSBC, UK||£85,000||-||-||-|
|NatWest||Royal Bank of Scotland plc, UK||£85,000||A (on Royal Bank of Scotland)||A3 (on Royal Bank of Scotland)||A-(on Royal Bank of Scotland)|
| Nationwide * |
Cheshire Building Society *
Derbyshire Building Society *
| Nationwide Building |
Society, UK *
|£85,000 *||A (on Nationwide Building Society)||A2 (on Nationwide Building Society)||A (on Nationwide Building Society)|
|NewcastleBuilding Society||NewcastleBuilding Society, UK||£85,000||BB+||-||-|
|Northern Rock||Bank of England/HM Treasury||All deposits backed by UK Government||-||Aa1||A|
|Norwich & Peterborough Building Society||Yorkshire Building Society, UK||£85,000||-||Baa2 (on Yorkshire BS)||-|
|Post Office||Bank of Ireland (UK) plc, EIRE||£85,000||BBB (on Bank of Ireland)||Ba1 (on Bank of Ireland)||-|
|PrincipalityBuilding Society||Principality Building Society, UK||£85,000||BBB+||Ba1||-|
| Royal Bank of Scotland |
|Royal Bank of Scotland plc, UK||£85,000||A (on Royal Bank of Scotland plc)||A3 (on Royal Bank of Scotland plc)||A-(on Royal Bank of Scotland plc)|
|ScarboroughBuilding Society *||Scarborough Building Society, UK *||£85,000 *||-||-||-|
|Skipton BuildingSociety *||Skipton Building Society, UK *||£85,000 *||BBB||Ba1||-|
|Standard Life Bank||Standard Life Bank Plc, UK||£85,000||-||-||-|
|State Bank of India||State Bank of India, India||£85,000||BBB-||Baa3||-|
| The Co-operative Bank * |
|The Co-operative Financial Services, UK *||£85,000 (in total) *||B (on Co-op Financial Services)||Caa1 (on Co-op Financial Services)||-|
|Tesco Personal Finance||Tesco plc, UK||£85,000||-||Baa1||-|
|West Bromwich Building Society||West Bromwich Building Society, UK||£85,000||-||B2||-|
|Yorkshire BuildingSociety *||Yorkshire Building Society, UK *||£85,000 *||BBB+||Baa2||-|
* Cheshire Building Society, Derbyshire Building Society and Dunfermline Building Society are trading divisions of Nationwide Building Society. Skipton and Scarborough building societies merged on March 30, 2009. Britannia Building Society is a trading name used by The Co-operative Bank plc.
The above list is not inclusive. For further information visit the FCA website.
How safe is peer-to-peer lending?
Many savers have turned to peer-to-peer lenders in recent years, as they often provide higher returns than banks and building societies.
Although peer-to-peer lending services are to be brought under the FCA’s remit with effect from April this year (2014), your cash still won’t be covered by the FSCS. There are, however, usually safeguards for investors, as most peer-to-peer lenders have funds in place so that if a borrower is unable to repay what they owe, the fund can step in and give the lender back all the money they are owed.
All peer-to-peer lenders, from 2017, must hold reserves of a certain percentage of loaned funds, or £50,000 – whichever is higher – to protect consumers in the event that they run into financial difficulties. Up until then, the minimum amount they must hold is £20,000.
If you are considering peer-to-peer lending, you can find more information at our dedicated hub. And to find out what actually happens to your funds, read Laura Howard’s article, Are peer-to-peer firms all the same?