Who Owns Who in the Banking Sector

Article Written By: MarkeD

The financial turmoil of the past 18 months has led to a wave of consolidation in the banking industry, making it even harder to ensure you're not putting all your eggs in one basket. We take a look at today's banking sector to find out who actually owns who on your highs street.

Why it matters

If a savings institution goes under, the Financial Services Compensation Scheme (FSCS) will provide compensation of up toandnbsp; 50,000 to single account holders andandnbsp; 100,000 for joint accounts. However, it's important to note, the compensation limit applies per banking licence and not per brand, meaning it's crucial you know who owns who.

When it gets confusing

Staying within this compensation limit is not as simple as just making sure you don't have more than andpound;50,000 saved with one banking group. Some banks have merged but continue to operate their bands under different banking licences. In some cases, special measures have been put in place so that merged groups are treated as having separate licences, even though they don't. While you won't go wrong if you ensure you don't have more than andpound;50,000 saved with any one institution, you could potentially miss out on good returns if two brands within one group are operating under separate licences and both have competitive deals.

A guide to the big operators

Lloyds Banking Group

This behemoth was created when the UK Government engineered the takeover of the struggling HBOS by Lloyds TSB. It's the UK's biggest savings provider. The good news is that HBOS and Lloyds TSB have continued to operate under separate licences, meaning you can have andpound;50,000 saved with each group and still be fully covered by the FSCS. The bad news is, both groups have multiple brands. In the one camp are Lloyds TSB and Cheltenham andamp; Gloucester. In the other are the HBOS brands of Halifax, Bank of Scotland, Birmingham Midshires, Intelligent Finance, the AA and Saga, all of which operate under one licence, meaning one andpound;50,000 compensation limit.

Santander

The Santander group owns Abbey and cahoot. It recently took over the savings arm of Bradford andamp; Bingley, through which it provides savings products for Asda. All of these brands operate under one licence, but Alliance andamp; Leicester, which Santander acquired in 2008, continues to operate under a separate one.

Royal Bank of Scotland

RBS is another institution with multiple brands. All RBS products, Virgin Money and Direct Line savings accounts are under one licence, but its subsidiary, NatWest, retained its own. As a result you can putandnbsp; 50,000 into a Virgin Money account and andpound;50,000 into a NatWest one without falling foul of the FSCS limit.

Nationwide

Nationwide only offers savings products under its own brand, but as the UK's biggest building society, it's been at the forefront of a wave of consolidation that's taken place in the mutual sector. The group recently acquired the Cheshire, Derbyshire and Dunfermline Building Societies, which operate under the same banking licence as Nationwide. But in order to prevent a flood of money being taken out of recently taken over building societies, the Financial Services Authority (FSA) has put special measures in place. As a result, if you had money saved with the three societies before they were taken over by Nationwide, you will continue to have separate compensation limits under the FSCS until the end of September 2009.

Other building societies

The same measures are in place for other building societies involved in takeovers, including Scarborough and Skipton, and Barnsley and Yorkshire. The measure also applies to The Co-operative Bank and its Smile brand, as well as its merger partner Britannia.

Other banks

A number of other banks have only one licence but more than one brand, such as HSBC and first direct, which are covered by the same andpound;50,000 limit. Mandamp;S Money, which HSBC provides products for, is covered by a different one.

Yorkshire Bank and Clydesdale have the same owner and operate under the same licence.

Post Office savings accounts are provided through a joint venture with the Bank of Ireland. Both brands have a single licence, although the Irish Government is currently guaranteeing all deposits held with the group.

About the Author

For more information see http://www.confused.com/savings Guide to Safe Savings.

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