James Daley: Bank British, and you can sleep easy

Sixteen months on from the collapse of Northern Rock, the question on everyone's lips is still – where will my money be safe? And as Britain's biggest banks shed billions from their market values this week, it's still not a question to which many people feel they've found the answer.

In my opinion, however, if you've got your money with a reputable UK-based institution, there's nothing to worry about. Certainly, no one with money in Royal Bank of Scotland, NatWest, Lloyds, Halifax or Bank of Scotland need lose any sleep about the hammering their share prices took over the past week.

Aside from the fact that all of these banks are protected by the UK Financial Services Compensation Scheme – which guarantees the first £50,000 of any customer's deposits – RBS (which also owns NatWest) is now 70 per cent-owned by the Government. It's inconceivable that it could be left to go bust – because the Government will get much better value by simply taking over the remaining 30 per cent and rolling it in with Northern Rock.

The same can be said for Lloyds (which has acquired Halifax and Bank of Scotland). The Government now owns 43 per cent of Lloyds, so would be sure to step in and take over the rest were its shares to continue collapsing.

As for HSBC, this is a strong global business. The UK represents only a small proportion of its operations, so there's nothing to worry about there. The same goes for Santander, which owns Abbey, Alliance & Leicester and Bradford & Bingley.

Of the big UK banks, that leaves Barclays, which rejected the Government's offer of investment last year. This, theoretically, leaves it a little more vulnerable than its peers, which is why its shares fell faster than its rivals' this week. But Barclays is in relatively good financial shape, and is well placed to weather the storm if investors regain their confidence in the bank. If the worst comes to the worst, however, it still seems highly unlikely that the Government could let Barclays go bust – the consequences would be disastrous.

If you've got your money with UK branches of European banks, you are taking on a slightly greater degree of risk than by staying at home. In the first instance, your money will be protected by the compensation scheme of the country where your bank is domiciled (although the UK scheme will top this up to ensure that the first £50,000 of your savings is paid back if your bank was to go bust). Each country's depositor protection scheme is ultimately only as strong as the government that stands behind it.

Hence, if Bank of Ireland were to go bust while looking after your money, you'd have to hope that the Irish government could meet its promise to repay you. For one bank, it might be OK, but there's a question mark over whether it would be able to pay out if its entire banking system collapsed.

So, if you want to sleep easy at night, my advice is to keep your money in a British bank or building society, and don't put more than £50,000 with any one institution. Although there may be higher rates offered by non-UK banks, it's important to remember that these higher rates come with a greater risk.

j.daley@independent.co.uk

PROMOTED VIDEO
Sport
Getty
News
Women have been desperate to possess dimples like Cheryl Cole's
people Cole has secretly married French boyfriend Jean-Bernard Fernandez-Versini after just three months.
Arts and Entertainment
AKB48 perform during one of their daily concerts at Tokyo’s Akihabara theatre
musicJapan's AKB48 are one of the world’s most-successful pop acts
News
Ian Thorpe has thanked his supporters after the athlete said in an interview that he is gay
people
News
The headstone of jazz great Miles Davis at Woodlawn Cemetery in New York
news
Arts and Entertainment
Brendan O'Carroll has brought out his female alter-ego Agnes Brown for Mrs Brown's Boys D'Movie
filmComedy holds its place at top of the UK box office
News
newsBear sweltering in zoo that reaches temperatures of 40 degrees
Arts and Entertainment
Professor Kathy Willis will showcase plants from the Royal Botanic Gardens at Kew
radioPlants: From Roots to Riches has been two years in the making
Extras
indybestThe tastiest creations for children’s parties this summer
Arts and Entertainment
TV The follow-up documentary that has got locals worried
Arts and Entertainment
Paolo Nutini performs at T in the Park
music
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

Arts and Entertainment
Eminem's daughter Hailie has graduated from high school
music
Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    HR Advisor - 6 months FTC Wimbledon, SW London

    £35000 - £40000 per annum + Benefits: Ashdown Group: HR Advisor - 6 Months Fix...

    Information Security Manager (ISO 27001, Accreditation, ITIL)

    £70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

    Biztalk - outstanding opportunity

    £75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

    Trade Desk Specialist (FIX, Linux, Windows, Network Security)

    £60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

    Day In a Page

    Super Mario crushes the Messi dream as Germany win the 2014 World Cup in Brazil

    Super Mario crushes the Messi dream

    Germany win the 2014 World Cup in Brazil
    Saharan remains may be evidence of the first race war, 13,000 years ago

    The first race war, 13,000 years ago?

    Saharan remains may be evidence of oldest large-scale armed conflict
    Scientists find early warning system for Alzheimer’s

    Scientists find early warning system for Alzheimer’s

    Researchers hope eye tests can spot ‘biomarkers’ of the disease
    Sex, controversy and schoolgirl schtick

    Meet Japan's AKB48

    Pop, sex and schoolgirl schtick make for controversial success
    In pictures: Breathtaking results of this weekend's 'supermoon'

    Weekend's 'supermoon' in pictures

    The moon appeared bigger and brighter at the weekend
    Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

    How Saudi Arabia helped Isis take over northern Iraq

    A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
    The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

    The evolution of Andy Serkis

    First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
    You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

    You thought 'Benefits Street' was controversial...

    Follow-up documentary 'Immigrant Street' has got locals worried
    Refugee children from Central America let down by Washington's high ideals

    Refugee children let down by Washington's high ideals

    Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
    Children's books are too white, says Laureate

    Children's books are too white, says Laureate

    Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
    Blackest is the new black: Scientists have developed a material so dark that you can't see it...

    Blackest is the new black

    Scientists have developed a material so dark that you can't see it...
    Matthew Barzun: America's diplomatic dude

    Matthew Barzun: America's diplomatic dude

    The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
    Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

    Meet the 'Quantified Selfers'

    From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
    Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

    Five-star reviews are just the opening act for British theatre's first non-white artistic director

    Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
    Mrs Brown and her boys: are they having a laugh?

    Mrs Brown and her boys: are they having a laugh?

    When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor