Santander - Next bank in line for mass withdrawals of savings?

[MarkRSi]

Hmmmm... I just opened an ISA with them a couple weeks ago and got the documents... do you think I should go ahead and transfer my savings in?

[madala]

...I have a considerable amount of savings, ISAs and my bank account with Santander but it's quite a bit under the £85 threashold for government renumeration if it all goes really pear-shaped....I am staying put for now and certainly have no intention of making matters worse for Santander by withdrawing and transferring elsewhere....not happy times.

[528Sport]

Hi,
Sorry if this may have been covered off.
My business banks with Santander, does the 85K garuntee cover business? LTD company?

I for one don't see pulling my money out will help if its covered by a garuntee.

Dave

[VictorMeldrew]

My business account is with them, but for the time being regardless of any assurances and talk of £85k guarantees, an early dividend will see what I'm owed in a safer haven, closer to my pocket. I'm not flogging my puds off just to find I can't get what I'm owed when I need it.

[hornet]

I've split my Santander savings 50:50 - one half stays put and gets used for monthly mortgage overpayments, the other goes to a savings account with a mutual (YBS). Reduces the potential amount locked up in FSCS claims should things go pear shaped, but doesn't quite constitute a full blown panic. Got my ISA with HSBC, so all savings I have elsewhere are subject to tax anyway. Worked out moving away from Santander costs something like £80 in lost interest, which I'll happily accept for the sake of not losing sleep/hair every time I read the financial news.

[DonkeyApple]

St John Smythe said:

They are safe up to 85k. Not quite sure why some people are questioning this?

Indeed, this isn't the issue. The issue is whether the Spanish will illegally empty UK accounts and whether the UK will have the balls to pre-empt.

The last thing we need is to be drawing on the FSCS because we did nothing to stop an overnight plundering of UK savings by an overseas power. Again.

[ExFiF]

aiui Moody's downrated Santander to A2.

So a thread starts with people giving all sorts of advice and questions about moving money to various other providers.

Presumably a lot also panic bought fuel.

Lets look at some of the others.
If somebody has more up to date numbers please edit my post but....

All A2
Bank of Scotland
The AA
Birmingham Midshires
Halifax
Intelligent Finance
Saga
all in Lloyds Banking Group, UK

Britannia Building Society A3
Chelsea Building Society Baa3

Lloyds TSB A2
Cheltenham & Gloucester A2

NatWest A2

Nationwide A2
Cheshire Building Society A2
Derbyshire Building Society A2

The Co-operative Bank A3

Let's have a bit of objectivity folks.

[davepoth]

ExFiF said:

aiui Moody's downrated Santander to A2.

So a thread starts with people giving all sorts of advice and questions about moving money to various other providers.

...

All well and good. But we aren't talking about the relative risk of Santander UK versus UK banks, but The risk of Santander Spain going down and taking Santander UK with it. And the chance of that is growing. Here's the fully Moody's report. Make of it what you will.

http://www.moodys.com/research/Moodys-downgrades-S...

[HeatonNorris]

Hmmm, that stuff about the ratings is interesting.... I'd been getting a bit worried about it all as I have considerable investment with Santander - it's above the government guarantee and half of it sits outside of government protection, too...

Thing is, the penalty for moving it would be fairly huge, so I'm likely to have to sit tight and kind of hope for the best on this one.

[WhoseGeneration]

anonymous said:

[redacted]

In which case I would hope that the UK Government would ask the EU to intervene to reverse the situation.
That's what membership of the EU is all about, isn't it?

[davepoth]

WhoseGeneration said:

anonymous said:

[redacted]

In which case I would hope that the UK Government would ask the EU to intervene to reverse the situation.
That's what membership of the EU is all about, isn't it?

Santander Spain would take the money and ship it straight out the door in Spain, working on the assumption that the UK government would pick up the tab if they bankrupted Santander UK in the process. There is literally no chance that Santander Spain will go bankrupt without attempting to use all of the assets at its disposal to avoid it.

By the time we get wind of what has happened, the money wouldn't be there; even if Santander Spain hadn't gone to the wall by that point it wouldn't be able to give the money back as it would have given it out to deposit customers.

[WhoseGeneration]

davepoth said:

Santander Spain would take the money and ship it straight out the door in Spain, working on the assumption that the UK government would pick up the tab if they bankrupted Santander UK in the process. There is literally no chance that Santander Spain will go bankrupt without attempting to use all of the assets at its disposal to avoid it.

By the time we get wind of what has happened, the money wouldn't be there; even if Santander Spain hadn't gone to the wall by that point it wouldn't be able to give the money back as it would have given it out to deposit customers.

The subtext of my post was that, if such should occur and the EU didn't resolve it in the favour of UK Santander customers, "Call me Dave" might grow some balls and say the UK will withdraw from the EU.

[davepoth]

WhoseGeneration said:

The subtext of my post was that, if such should occur and the EU didn't resolve it in the favour of UK Santander customers, "Call me Dave" might grow some balls and say the UK will withdraw from the EU.

Hang on, I think I see a squadron of pigs majestically soaring by my window...

[GC8]

The Great War started over less. We need, as a nation, to re-find our backbone - perhaps we should consider a naval blockade?

[WhoseGeneration]

davepoth said:

Hang on, I think I see a squadron of pigs majestically soaring by my window...

You do echo my thoughts.

[munky]

anonymous said:

[redacted]

It has nothing to do with approval of the Treasury or anyone. The FSA monitors UK banks' liquidity daily, and if it looks like either cash is about to go walkies to a foreign parent, or if cash is being whipped out by UK depositors so fast that the bank cannot liquidate assets fast enough to cover it, then the FSA shuts it down and ringfences the cash. There is precedent for this.

Just as panic buying of fuel caused a fuel shortage, it is depositors panicking, often whipped up by irresponsible media speculation, that causes bank failures. It becomes self-fulfilling, as it did with Northern Rock. When enough people queue around the block to withdraw, the bank no longer has enough cash to meet its minimum liquidity requirements, and the FSA shuts it down (or with NR, it gets nationalised).

If those not covered by FSCS for whatever reason want to reduce risk, then that's up to them but if someone is covered by FSCS and still withdraws cash, then they are the problem and it is their mindless panic that could bring down Santander - not the Spanish - and stitch up other customers.

I have cash in Santander (as they took over A&L), and I'm bloody well keeping there. Until I blow it all on my wedding, that is..

[davepoth]

munky said:

It has nothing to do with approval of the Treasury or anyone. The FSA monitors UK banks' liquidity daily, and if it looks like either cash is about to go walkies to a foreign parent, or if cash is being whipped out by UK depositors so fast that the bank cannot liquidate assets fast enough to cover it, then the FSA shuts it down and ringfences the cash. There is precedent for this.

But the FSA has no mandate to monitor Spanish banks, does it? It can only go on information provided by the Spanish regulator. I bet they aren't very good.

In any case, Santander wouldn't be that blatant. Send the assets out to Asia for "overnight trading", as I assume they would do anyway, and then divert it back into Spain rather than the UK the next day. I assume that they'd be able to move quite a lot in that way before alarm bells rang, especially since they'd do it out of hours.

[WhoseGeneration]

davepoth said:

But the FSA has no mandate to monitor Spanish banks, does it? It can only go on information provided by the Spanish regulator. I bet they aren't very good.

In any case, Santander wouldn't be that blatant. Send the assets out to Asia for "overnight trading", as I assume they would do anyway, and then divert it back into Spain rather than the UK the next day. I assume that they'd be able to move quite a lot in that way before alarm bells rang, especially since they'd do it out of hours.

One would hope the FSA is wise to such as this and has regulators on 24 hours monitoring.
Or, am I just too simple?

[munky]

davepoth said:

munky said:

It has nothing to do with approval of the Treasury or anyone. The FSA monitors UK banks' liquidity daily, and if it looks like either cash is about to go walkies to a foreign parent, or if cash is being whipped out by UK depositors so fast that the bank cannot liquidate assets fast enough to cover it, then the FSA shuts it down and ringfences the cash. There is precedent for this.

But the FSA has no mandate to monitor Spanish banks, does it? It can only go on information provided by the Spanish regulator. I bet they aren't very good.

In any case, Santander wouldn't be that blatant. Send the assets out to Asia for "overnight trading", as I assume they would do anyway, and then divert it back into Spain rather than the UK the next day. I assume that they'd be able to move quite a lot in that way before alarm bells rang, especially since they'd do it out of hours.

Santander UK is a UK registered bank, so the FSA most definitely has a mandate. To all intents and purposes, it is a British bank that happens to have a single Spanish shareholder. It is fully regulated by the FSA, and they have complete authority over the UK part of Santander. There are strict rules on shifting cash around between subsidiaries and parents, and any UK exec of Santander that allowed any cash to leave outside the rules would find themselves in jail, so on balance I don't reckon they'd allow it. Now the rules on branches vs subsidiaries are a bit different, and I haven't checked whether Santander UK is a branch or a sub, but if it's a sub (as I expect it is) the rules are tighter. This is why the UK pulled out (blatantly misused) an anti-terror law to seize the assets of Landsbanki, because their UK operation was a branch, not a sub. Also because of it being a branch, it wasn't fully covered under the FSCS - part (£16,500) was covered by the Icelandic scheme (part of the EU 'passport' scheme I believe) with the remainder up to £50k or whatever the FSCS was then, covered by the FSCS.

Ah, just looked it up. Santander UK is a subsidiary, and so subject to tighter rules on cash transfers and "connected lending" (subsidiaries lending to the parent), and more protection for depositors than if it was a branch.

[davepoth]

munky said:

Santander UK is a UK registered bank, so the FSA most definitely has a mandate.

Santander of Spain is a Spanish bank though. That's what I meant.

munky said:

To all intents and purposes, it is a British bank that happens to have a single Spanish shareholder. It is fully regulated by the FSA, and they have complete authority over the UK part of Santander. There are strict rules on shifting cash around between subsidiaries and parents, and any UK exec of Santander that allowed any cash to leave outside the rules would find themselves in jail, so on balance I don't reckon they'd allow it.

However, I guess Santander UK shift money out of the UK and into Asia for the financial wizards out in Hong Kong to work their magic overnight as a perfectly normal and expected part of their business. If the st hit the fan in a sudden fashion, as is expected, I'm thinking that money would not come back to the UK - out of the control of the FSA and indeed Santander UK's executives, Santander head office in Spain pulls all of the money back from the worldwide operations to try and cover the bank run that is categorically not going to happen.