Brits rush to 'guaranteed' banks
LONDON -- The great savings rush is on in Britain, as worried investors flock to put their money into one of several safe banks that guarantee 100% of deposits — and are shaking up the banking industry throughout Europe.
Mike Bellhouse lined up Thursday to open an account at Northern Rock. The bank failed last year, but the government took it over and fully guarantees customers' deposits.
"It's all about security," says Bellhouse, 31, a London real estate agent.
It's also a big relief for savers nervous about the safety of their money in the credit crisis that began in the USA and washed across Britain and Europe. Ensuring the safety of people's bank deposits is one reason the financial bailout plan before Congress would increase the amount of personal savings guaranteed in U.S. banks to $250,000 from $100,000.
Across Europe, the amount protected in banking accounts varies widely — from $26,400 in Switzerland to $212,000 in Italy, according to a survey by the Paris-based Organization for Economic Cooperation and Development.
Britain raised its compensation limit for bank deposits to 50,000 pounds ($88,500) per customer from the current 35,000 pounds ($62,000) Friday and indicated even more protection may be coming, as it moved to assuage consumer concern about the global credit crisis.
Feeling secure
But there's nothing like 100% insurance on an unlimited amount, says Peter Ryan, 65, a doctor. He opened an account at Northern Rock — one of the few nationalized banks in Britain — after selling a house several months ago and looking for a single bank to safely deposit the proceeds.
"It's 100% guaranteed by the Bank of England and the government," Ryan says at a Northern Rock branch in central London.
It didn't matter that new customers can't open long-term certificates of deposit that pay higher interest rates, as the bank announced Thursday. For Bellhouse, he wants to separate his savings from the bank that holds his mortgage, and he wants the money guaranteed to be safe.
