Don’t fret over Santander deposits, FSCS says

While instability in the eurozone has tinged the waters with more than a bit of panic, you need not fret over any deposits you have with Spain-based banking giant Santander, said Mark Neale, chief executive of the Financial Services Compensation Scheme.

The FSCS protects as much as £85,000 worth of your deposits with each banking group.  This means that if you’ve got more than that amount with one bank (or group of banks under the same umbrella), the only thing you need to do is to separate out your cash into chunks of £85,000 or smaller in order to gain protection for all your hard-earned cash.

Mr Neale’s words were sparked by some worried murmurs being made by Santander investors after learning that many Spanish banks had been given a credit downgrade by Moody’s.  Included in this number was Santander UK and also Banco Santander, its parent company; with the struggles being faced by the economy in the country, Spain’s banks saw a jump in the number of bad loans this past March, hitting an 18-year high.

Santander UK’s credit rating now stands at A2, which means Moody’s now judges its ability to repay its obligations on short-term debts as ‘strong’ instead of ‘superior.’  Bank ranches and call centres were inundated with enquiries from concerned savings account holders, and some larger-value accounts were beginning to be drained by worried consumers as well; the £3 million that Kent County Council had deposited in Santander was withdrawn in a hurry, as the local authority wished to avoid the £50 million in losses it sustained in 2008 due to the collapse of Icelandic banks.

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