Money tip #99 – How to protect your savings from your bank going bust

10 min Read Published: 18 Aug 2010

Article updated 1st January 2011.

If your bank our building society go bust you will not necessarily lose your life savings, as long as you plan sensibly.

Savers assume that their money is safe when they deposit it with their bank or building society. However, with the collapse of Lehman Brothers in September 2008 and the banking sector almost completely melting down, if any lessons are to be learned it’s that as soon as you part with your money, even on deposit, an element of risk is involved.

Hoarding your money under your floor boards is not necessarily the answer as inflation and burglars then become threats to your stash.

But fortunately there is some protection offered on savings with a UK bank or building society, and indeed some overseas institutions, registered with the Financial Services Authority (FSA).

Under the terms of Financial Services Compensation Scheme (FSCS) you are protected for the first £85,000 of money held on deposit (£170,000 for a joint account) with your bank or building society. That means that should the unfortunate happen and your bank or building society go bust then you will get back up to £85,000.

But the good news is that the £85,000 limit applies to each institution. So if you have more than £85,000 of savings in you sole name then it makes sense to spread your money around so that no more than £85,000 is held with any one institution. Admittedly you may not secure the best interest rate possible doing this (as banks often award higher rates to larger cash balances) but you may feel this a small price to pay for peace of mind.

So as long as I keep my savings under £85,000 (or £170,000 for a joint account) per institution and they are registered with the FSA I should be ok?


Not quite. Nothing in life is that simple. The FSCS offers protection per institution registered with the FSA. So if an institution has a number of brands but only one group licence with the FSA then the FSCS will only guarantee £85,000 of savings across the group.

So if for example you have £85,000 in savings with each of the Halifax, Bank of Scotland and Intelligent Finance (a total of £255,000) the FSCS would only guarantee the first £85,000 across the board. This is because the three brands are all part of HBOS which only has one registration with the FSA. However, other banking groups such as Lloyds TSB have different FSA registrations for different brands within the group.

So you can see that spreading your savings around can be a minefield. Fortunately the people at Moneysupermarket.com have compiled a ‘who owns who’ table of the major players to aid you in spreading your savings around, so maximising your protection. They update the table periodically and it can be found here. However, I’ve included the Moneysupermarket table (and corresponding notes) as at 21st December 2010 below:

Provider Parent company & country of origin Maximum level of protection
Santander
(formerly Abbey)
Alliance & Leicester
ASDA
Bradford & Bingley
Cahoot
Banco Santander, Spain £85,000 (in total)
Akbank1 Akbank N.V, Netherlands 1 Netherlands Depositors' Compensation Scheme covers up to €100,000 (about £85,000)
Anglo Irish Bank Anglo Irish Bank plc, 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
Bank of Baroda Bank of Baroda, India £85,000
Bank of Cyprus UK Bank of Cyprus, Cyprus Central Bank of Cyprus Deposit Protection Scheme covers up to €100,000 (about £85,000)
Bank of Scotland
The AA
Birmingham Midshires
Halifax
Intelligent Finance
Saga
Lloyds Banking Group, UK £85,000 (in total)
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
Barclays
Woolwich
Barclays Bank plc, UK £85,000 (in total)
Barnsley Building Society 6 Yorkshire Building Society, UK 6 £85,000 6
Britannia Building Society 4 The Co-operative Bank plc UK 4 £85,000 4
Capital One Skipton Building Society 4 £85,000
Cater Allen Private Bank Banco Santander, Spain £85,000
Chelsea Building Society 6 Yorkshire Building Society, UK 6 £85,000 6
Cheshire Building Society 4 Nationwide Building Society, UK 4 £85,000 4
Citibank Citigroup Inc. USA £85,000
Close Brothers Close Brothers Group plc, UK £85,000
Clydesdale Bank
Yorkshire Bank
National Bank Group, Australia £85,000 (in total)
Coventry Building Society 5 Coventry Building Society, UK 5 £85,000 5
Derbyshire Building Society 4 Nationwide Building Society, UK 4 £85,000 4
Dunfermline Building Society 4 Nationwide Building Society, UK 4 £85,000 4
Egg Citigroup Inc. USA £85,000
FirstSave Bank of Nigeria Bank of Nigeria, Nigeria £85,000
HSBC
First Direct
HSBC Bank plc, UK £85,000 (in total)
ICICI Bank ICICI Bank Limited, India £85,000
ING Direct
Kaupthing Edge 2
Heritable Bank 2
ING Direct N.V, Netherlands Netherlands Depositors' Compensation Scheme covers up to €100,000 (about £85,000)
2 ING Direct took over Kaupthing Edge & Heritable Bank's online deposit accounts in 2008
Investec Private Bank Investec Bank plc, UK £85,000
Julian Hodge Bank Julian Hodge Bank £85,000
Kent Reliance Building Society Kent Reliance Building Society, UK £85,000
Laiki Bank Marfin Popular Bank (Cyprus) Central Bank of Cyprus Deposit Protection Scheme covers up to €100,000 (about £85,000)
Leeds Building Society Leeds Building Society, UK £85,000
Lloyds TSB
Cheltenham & Gloucester
Lloyds Banking Group, UK £85,000 (in total)
Manchester Building Society Manchester Building Society, UK £85,000
Mansfield Building Society Mansfield Building Society, UK £85,000
Market Harborough Building Society Market Harborough Building Society, UK £85,000
Marks & Spencer Money Marks & Spencer Financial Services plc & HSBC, UK £85,000
National Savings & Investments Bank of England/HM Treasury All deposits backed by UK Government
NatWest Royal Bank of Scotland plc, UK £85,000
Nationwide 4 Nationwide Building Society, UK 4 £85,000 4
Newcastle Building Society Newcastle Building Society, UK £85,000
Northern Rock Bank of England/HM Treasury £85,000
Norwich & Peterborough Building Society Norwich & Peterborough Building Society, UK £85,000
Post Office Bank of Ireland (UK) plc, EIRE £85,000
Principality Building Society Principality Building Society, UK £85,000
Progressive Building Society Progressive Building Society, UK £85,000
Punjab National Bank Punjab National Bank, India (PNB) £85,000
Rothschild Reserve N M Rothschild & Sons Limited, UK £85,000
Royal Bank of Scotland
Direct Line
Royal Bank of Scotland plc, UK £85,000 (in total)
Saffron Building Society Saffron Building Society, UK £85,000
Sainsbury's Bank Sainsbury's Bank plc & Lloyds Banking Group plc, UK £85,000
Scarborough Building Society 4 Skipton Building Society, UK 4 £85,000 4
Scottish Widows Lloyds Banking Group plc, UK £85,000
Secure Trust Bank Arbuthnot Banking Group plc, UK £85,000
Shepshed Building Society Shepshed Building Society, UK £85,000
Skipton Building Society 4 Skipton Building Society, UK 4 £85,000 4
Standard Life Bank Barclays Bank plc, UK £85,000
Stroud & Swindon Building Society 5 Coventry Building Society, UK 5 £85,000 5
State Bank of India State Bank of India, India £85,000
The Co-operative Bank 4
Smile
The Co-operative Bank plc, UK 4 £85,000 (in total) 4
Teachers Building Society Teachers Building Society, UK £85,000
Tesco Personal Finance Tesco plc, UK £85,000
Turkish Bank (UK) Ltd. Turkish Bank Limited, Turkey £85,000
United Trust Bank United Trust Bank, UK £85,000
Virgin Money 3 Virgin Group, UK3 £85,000 3
West Bromwich Building Society West Bromwich Building Society, UK £85,000
Yorkshire Building Society 6 Yorkshire Building Society 6, UK £85,000 6
Whiteaway Laidlaw Bank Manchester Building Society, UK £85,000

1 Akbank N. V. is a wholly owned subsidiary of Akbank T.A.S, Turkey.
2 ING Direct took over Kaupthing Edge & Heritable Bank's online deposit accounts in 2008.
3 Deposits managed by Royal Bank of Scotland under its FSA registration.
4 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.
5 Coventry Building Society and Stroud and Swindon Building Society completed a merger on September 1, 2010.
6 Barnsley Building Society is a trading name of Yorkshire Building Society. Chelsea Building Society and Yorkshire Building Society merged on April 1, 2010.

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

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