icesave accounts not accessible

[smelly]

http://news.bbc.co.uk/1/hi/business/7656387.stm

"In an announcement on state radio, the commerce and banking minister Bjorgvin Sigurdsson said the board of directors of Landsbanki had been dismissed and the bank put into receivership. "

OK I've got some cash in Icesave (about £1000) i'm not too worried about getting access to it either as it's only really needed in a minor emergency. Most of my cash is in NS&I and my Barclarys account. My girlfriend saw the news and tried to contact icesave with no luck and she's panicking.

She works for a big 4 accounting firm and says there are people in her office taking the cash out of their commercial back accounts and keeping the cash at home!

I think this is a total over reaction to this financial situation. I do not for one minute think the domestic banking system is going to fold. It would cause so much chaos if Barclays, Lloyds, Natwest, HSBC shut up shop and say no access to your money (actually we don't know if you have any cash at all).

What i don't understand is why all this panic?

[Bluecube]

Yup, Icesave is down for teh time being. I'm in a bit of a limbo because I issued a transfer order last night so I don't know if my cash got moved out before they stopped any transactions...

As to why the panic? Because the banks have shedloads of short term loans that they'll need to pay off sometime soon. What usually happens is that they take out another loan to pay off the previous loan but because none of the banks trust each other, none of them are lending to each other. If the bank doesn't have enough cash to pay its loans (and none have) then they go bust. And we don't really want that!

[Saracen]

There is NO totally safe option for what to do with your money.

It's all very well taking ot out of banks and sticking it under the mattress, but supposed you have a fire at home?

You can stick it in a fireproof safe I suppose, but what if you get burgled. Or have a flood?

You can buy gold, buy commodities are volatile and as gold's been popular and in demand, the price has gone up. If the heat was to go out of the current crisis and some confidence returns, the price of gold could plummet. Note I say "could", not "will".

I agree with keeping some cash at home. Having a cash reserve in case of problems with your bank is no bad idea. But providing you've got the cash in major household name banks, then long term at least, it's about as safe as it gets. The FSCS compensation scheme now protects the first £50,000 for any depositor with an FSA authorised bank, per authorisation number. For joint accounts, it's £100,000. So, if you've got less than £50,000, the government guarantee savings and deposits. Just make sure that the bank is "authorised", and all the UK well-known names are, so it's typically only an issue for some of the more obscure foreign banks, and even some of them are FSA authorised, and therefore covered.

The above, of course, does relate to savings and deposits, so it;s current accounts, savings accounts, ISAs (though check non-cash ISA because I haven't looked to see if they're covered) etc, but it does NOT cover investments, and especially not shares, etc.

So .... for people taking their money out of NatWest, Lloyds, etc, to keep it at home, I think it's a daft step. Firstly, there's the risks I mentioned of fire, burglary, etc. Secondly, given the government guarantees, for standard bank deposits and savings to be at risk, there would need to be a complete collapse of the entire economy with iron-clad government guarantees meaning nothing. And if the situation were that bad, then we're talking apocalypse. If the entire banking and governmental system has collapsed, then precisely what do they think that pile of pretty printed paper they've got so carefully stashed at home is going to be worth?

The ONLY thing that makes anything worth anything is what you can get for it. That's rule number 1 of economics. Rule number 2 is about supply and demand. And if the economy has collapsed and the banking system completely ceased to exist, what demand is there going to be for a piece of paper based on that system? They'd have about as much luck using that as money as I would if I wrote "this is ten pounds" on a piece of photocopy paper, and walked into a bank now and expected to get two £5 notes for it.

If the entire system melts down (and I can't see any prospect of that) to the extent that government guarantees are worthless, then so will the money stashed at home be worthless. So if they're thinking alone those lines, they'd be better off investing in a large supply of tinned food, bottled water, digging a deep bunker in a remote field (so they can spend some of that banked money buying the field), and a few guns to protect thermselves. Oh, and don't forget a can opener.

As for why all the panic, well, the financial system is in severe trouble and there are some very real underlying causes, not least of which is huge levels of debt, a good part of which is now looking like it's bad debt. And the more the economy goes into slowdown, or even reverse, the bigger that problem is going to be since most people's ability to pay debts (like their mortgage) relies on having a job and jobs WILL go .... and already are.

But the biggest problem is that the entire edifice relies on confidence. At the most basic, that's what money itself actually is - confidence. As I said earlier, what makes that banknote in your wallet actually worth anything at all? The answer is the virtually unquestioned belief that it's worth something. And the biggest problem, and the cause for what "panic" there is is that that basic unquestioned belief is now looking shaky. And unfortunately, panic reduces confidence, which begets more panic. We are, in my opinion, now at the point where a major contributor to falling confidence is falling confidence. We're talking ourselves into a situation where it's going to be far worse than it need be.

Another major factor clobbering confidence is the dawning realisation on markets round the world that they are really to big even for governments to be able to control. Repeated and ever more frantic central bank interventions, of ever increasing magnitude, aren't actually stopping the basic problems. They're merely sticking a temporary band-aid over the wounds, but not stopping the blood flow. And that dawning reality is making those with very serious money at their disposal very jittery.

And it wouldn't surprise me at all to find that there are some that are taking full advantage of this. Major western economies are in share meltdown, and most shares are, in my view, seriously cheap right now. But when all this stops, a lot of recent stock market falls are going to reverse, and shares bought now are going to be seriously cheap. If foreign institutions want to buy up large parts of western economies, now's the time to do it and I don't believe some aren't actively doing it. Of course, it's got some risk, because while most shares will (IMHO) go back up quite a lot, some companies will go under. The trick will be picking those that survive.

[kalniel]

Crap. There go my savings. I was leaving it in precisely because I think panic withdrawing makes things worse. It's under the FSCS limit of course, but even if I do get it all back I'll probably loose the tax free status on the ISA

[Bluecube]

See BBC News - Icesave expected to be declared insolvent. You can claim your money back from the FSA but be prepared for some form filling... What a hassle!

[Zathras]

Problem is the Iceland government (and not our FSA/FSCS) guarantee the first 20,000 euros of any account, and there're questions about whether Iceland can and will be able to cover all the payments and whether they'll pay off local customers in preference to foreign deposits. I should know, I've got this year's ISA allowance with them

[cptwhite_uk]

Same for me and my missus (2 accounts). In fact just opened my account with the 20 August and haven't even bothered to open all the paperwork i recieved from them or even look on my account online! What fun, I couldn't even tell you the exact maount in the account as it was a transfer from a Nationwide ISA + £2000 deposit.

We're both well below the 20,000 euro limit so fingers crossed I should get the full amount back. Time to get on the phone to the FSA...

[smelly]

OK having just had lunch with the girlfriend she's still upset (I think it's something to do with our wedding tbh) but she's more reassured as i'm going to be withdrawing a couple of grand from my barclays account to pay for some of the wedding stuff. Money for the bar bill, the wedding photographer, taxis and misc costs on the day.

TBH i was more shocked in the lack of shops stocking size 6 shoes! was trying to get my wedding shoes at lunch also.

[TheAnimus]

This is why i've never been that comfortable with the idea of 'passporting' to avoid FSA regulations.

Another countries poletitions shouldn't and won't give two hoots about the foreign money not been repayed ahead of their own citizens.

[Gerrard]

I think the problem Iceland has is that its banks' debt is 6 times their GDP, so they wouldn't be able to offer 100% guarantee without a bailout from another country/EU. Personally, I'll be more annoyed with the expected interest rate drop later this week.

[MadduckUK]

perhaps the accounts been FROZEN

[kalniel]

[Zathras]

Looks like the FSCS is going to handle all the communications with savers here in the UK, fortunately saving us from having to take Icelandic lessons. I'm still concerned that the Icelandic compensation scheme only covers $80m but through Icesave alone UK savers have deposited in the region of $4bn I wouldn't be surprised if the Icelandic government guaranteed local savers over foreigners.

[Clunk]

perhaps the accounts been FROZEN

Or just bjorked?

[Barrichello]

Not looking good for anyone with Icesave. Latest news here

The Banking Compensation Scheme "expects (Icelandic internet bank) Icesave to default", meaning 300,000 UK savers may need to claim compensation

[iranu]

My old man took 7k out of his icesave account a few weeks back to pay to get his garage and extension roof done. Not got much left in that account now apparently and he's wiping his brow. Phew. Similarly I set up an account with Kaupthing Edge and was going to put 10k in there @ 7% or something. Glad I didn't. Banking system has gone mad.