Today’s news that Santander UK’s credit rating has been downgraded, along with 16 Spanish Banks, is understandably of concern to many – however our advice remains the same for Santander UK customers as it is for savers with any other UK savings provider.
The key thing to remember is that Santander UK (the combined Abbey, Alliance & Leicester and Bradford & Bingley Savings) is regulated by the FSA and is a member of the UK Financial Services Compensation Scheme (FSCS). So although no one can be sure what will happen in the weeks and months to come, savers can rest assured that as long as the amount of money they have with Santander plus its linked provider Cahoot is within the FSCS limit, their money is protected.
The UK FSCS covers up to £85,000 per person, per licence, and the key point here is “per licence”. Over the years, the amount protected has increased to £85,000, this is per banking licence rather than per brand.
So should you be concerned? We asked Santander UK for its comments
Savings Champion: Should savers be concerned about savings held with Santander?
Santander’s response: No. Both Santander Group and Santander UK are strong businesses focused on retail banking with no exposure to toxic financial products. Santander’s UK business is strong and has a standalone credit rating which is one of the highest credit ratings of any UK bank. Santander UK plc is also fully regulated by Financial Services Authority and all its deposits are covered under Financial Services Compensation Scheme.
Furthermore, Santander operates under a subsidiary model. This means that Santander UK plc is completely autonomous from its Spanish parent company. This structure acts as a firewall to prevent problems within one part of the group spreading to other units in the event of financial difficulties. Santander also operates a “firewall” approach to borrowing and lending in the markets it operates in. This means that money raised in the UK stays in the UK.
Savings Champion: Are you seeing savers withdraw money from Santander accounts over fears about safety?
Santander’s response: No. In fact retail savings have increased on this time last year, driven by a range of competitive ISAs and the new 123 current account, which is proving popular.
Savings Champion: What is your advice to savers?
Santander’s response: Savers should not be concerned. Santander UK plc is fully regulated by Financial Services Authority and all its deposits are covered under Financial Services Compensation Scheme. Savers deposits are covered by the FSCS by up to £85,000, as with all other UK banks.
We will continue to monitor this situation and will let you know when we have any further information or comments.