Worried about the eurozone crisis? The FSCS has your back

While the eurozone crisis is putting everyone’s teeth at edge – especially since Santander, one of the largest banks in the UK, is based in Spain, one of the countries that could be teetering on economic disaster – don’t forget that the Financial Services Compensation Scheme offers rock-solid guarantees for your deposits up to as much as £85,000 per banking group, experts say.

The unwelcome thought of more banking failures on the horizon has made a nation of already harried savers ready to jump at shadows, especially with the news that Moody’s has downgraded the credit ratings of 16 Spanish banks, including some that have already been partly-nationalised by the Spanish government due to bailouts.  The ripples have spread across to the UK as well, with Santander’s UK division being downgraded to an A2 credit rating after their parent company needed to set aside nearly €3 billion to ensure they had enough cash on hand to cover asset losses.

While last month saw the bank being lauded for its business banking facilities, it’s not just personal savings account customers that are abandoning their faith in Santander UK.  Kent County Council announced last week that it will no longer use the financial service provider for making overnight deposits over fears that there wasn’t enough insulation between it and its Spanish parent, a cautionary step instituted from the £50 million loss due to the 2008 Icelandic bank collapse.  However, savers have little to worry about in practice, as the FSCS guarantees protection for the initial £85,000 of their savings balances per institution, per person.

Of course, customers must keep in mind that each banking institution can be comprised of several banks and building societies as under a registration that is shared across all of them.  For instance, Northern Rock, which was recently bought out by Virgin Money, now shares a registration between both institutions, so if you have more than £85,000 in deposits spread across both companies, you won’t be covered past that amount in the unlikely event of a bank failure.

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