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British protection of bank deposits increased


Published :
Fri, 03 Oct 2008 11:34
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London - Britain Friday increased the upper limit of guarantees offered to savers on deposits to 50,000 pounds (90,000 dollars), the Financial Services Authority (FSA) said. The increase from 35,000 pounds is due to come into force next Tuesday as part of a wider package of stabilization measures worked out after the near-collapse of the Northern Rock lender last year.

The Financial Services Compensation Scheme would also pay up to 100,000 pounds to couples with a joint account who lost money when a bank failed, said the FSA.

The government of Chancellor Gordon Brown has come under intense pressure to introduce a much wider guarantee scheme following the decision by the Irish government this week to give blanket coverage for all savings held in the country's six main banks.

The Irish scheme, totalling 400 billion euros (560 billion dollars) over the next two years, has been criticized by Britain and by the European Union (EU) for "distorting competition."

However, savers in Britain, unnerved by the uncertainty on financial markets, have ignored the concerns of politicians and started to move their funds to Irish banks, analysts said.

They said there had been a three-fold increase in the number of people opening accounts with Ireland-based institutions during the first three days of this week, compared with the same period of last week.

There has also been a rush among savers to put their money with institutions that are seen as "safe," such as Northern Rock, which was nationalized in February.


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