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October 1, 2008    

Savings of up to £50k to be protected

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by Kay Murchie

The Government has announced its intention to guarantee bank deposits up to £50,000.

With the global credit crisis showing no signs of abating and banks collapsing or being nationalised, Prime Minister Gordon Brown told the BBC he will do whatever it takes to protect people’s savings.

The announcement comes after the Government of Ireland said earlier this week it will guarantee the deposits and debts of the country’s banks for the next two years.

The Irish scheme covers Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Irish Nationwide Building Society and the Educational Building Society.

Following the announcement, Irish-owned banks have seen a flurry of deposits as savers see it as a more secure way of guaranteeing their funds should their bank go bust.

Under current rules in the UK, only the first £35,000 of an individual’s money is fully protected should a bank collapse.

However, it is expected that next week, the Financial Services Authority will reveal plans to raise the limit to £50,000.

However, Gordon Brown pointed out that no savers had lost money in the past as the Government had intervened.

Mr Brown said Northern Rock customers did not lose out and those saving with Bradford and Bingley will see their deposits safeguarded by Abbey, while HBOS will see their savings transferred to Lloyds TSB.

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