Page last updated at 13:09 GMT, Thursday, 2 October 2008 14:09 UK

Where is the safest place for your cash?

By Ian Pollock
Personal finance reporter, BBC News

Ha'penny Bridge, Dublin
Irish savers now have an advantage over those in the UK

The emergency decision by the Irish government to guarantee the safety of all deposits in six of its main savings institutions for two years may give UK savers a great opportunity.

If you want somewhere secure to put your cash during the current financial crisis, then opening an account with any of the six looks like a very good idea.

The guarantee lasts for the next two years and potential customers will not need to take a flight or ferry to the Irish republic to take advantage of it.

Four of the six have branches or activities in the UK, and at least two are publicly very keen to have your money.

"We'd be very happy to accept deposits," said a cheerful Michael Fingleton, chief executive of the Irish Nationwide building society.

"We prefer to have the average man's deposit rather than very large ones, which are very volatile," he explained.

Competitive advantage

Currently Mr Fingleton's society has only two branches in the UK - one in London and one in Belfast - with about 25-30,000 customers between them.

The guaranteed six
Allied Irish Bank
Anglo Irish Bank
Bank of Ireland
Educational Building Society
Irish Life and Permanent (Ireland's biggest life insurance company)
Irish Nationwide Building Society

And as luck would have it a new branch will be opening in Bristol in the next week or so.

The Financial Regulator in Ireland has suggested that the Irish savings institutions should not trumpet their extra protection too loudly, for fear of giving them a clear advantage over their UK counterparts.

But Mr Fingleton has a different plan.

"We are planning to launch an advertising campaign in the next couple of weeks, in the papers," he said.

"We'll be emphasising that the rates are guaranteed by the Irish government," he added.

As far as he is concerned, the announcement by the Irish Department of Finance covers all depositors of the six named savings organisations, wherever they may be, and whoever they are.

That is a view shared by the Anglo Irish Bank, which has seven branches in England and Scotland and one in Belfast, with approximately 100,000 savers.

"The clear understanding we have received is that this is total protection for depositors of the Anglo Irish Bank, regardless of where they are," said a spokesman.

However a press officer at the Department of Finance in Dublin was not quite so categorical.

"In this case the legislation will be coming along in the next week and we can't give a definitive answer until then," he said.

"But normally a wholly owned subsidiary would be covered - so it's probably yes.

"But a final decision remains to be made," he emphasised.

Post Office

The two biggest banks active in the UK which are covered by the extra protection are the Allied Irish Bank (AIB) and the Bank of Ireland (BoI).

The announcement applies to the Bank of Ireland in all our jurisdictions and to all our subsidiaries
Bank of Ireland spokeswoman

The AIB has 27 branches in England, Scotland and Wales and 47 in Northern Ireland where it is known as the First Trust Bank.

"We do expect that all AIB activities will be covered," said a spokesman.

The Bank of Ireland has 46 branches in Northern Ireland and 11 offices in England and Scotland, where it focuses on business rather than High Street customers.

As well as running the mortgage lending business of the former Bristol & West building society, it also runs the financial services division of the UK Post Office.

Through that link the BoI now has about 1.5m customers with deposit accounts, credit cards and insurance, so anyone with a savings account will also benefit from the Irish government's generosity.

"The announcement applies to the Bank of Ireland in all our jurisdictions and to all our subsidiaries," said a spokeswoman.

Ulster Bank of Ireland and First Active have also applied to be part of the guarantee scheme but have not yet been accepted.

National Savings

Of course, you do not need to look across the Irish sea for a 100% government backed guarantee for your savings.

The UK's own National Savings & Investments (NS&I), the people who sell premium bonds, offer just that sort of government backing.

It offers a wide variety of short and long term savings accounts, but does not offer a standard bank account with cheque book and standing order and direct debit facilities.

However its Easy Access savings account does offer a cash card so you can withdraw money from an ATM.

Some of the interest rates on offer tend to look a bit unattractive compared to some commercial competitors, but that is what you pay for 100% certainty of getting your money back.

And for some savers the index-linked accounts (offering protection against inflation) and tax free accounts, can be a good deal in their own right.

The other state-backed savings institution that cannot go bust is the Northern Rock.

Now it is nationalised it too has a 100% state guarantee and is very keen to have your money.


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