Why a bank merger can risk your cash

Why a bank merger can risk your cash

Savers need to monitor acquisitions and mergers to ensure that their money stays safe when their bank or building society breaks down.

Last month, Clydesdale and the Yorkshire Bank Group (CYBG) bought Virgin Money, while Holmesdale BS merged with Skipton BS.

Those who do not see any change in their compensation limit with Virgin Money can tell savers at Holmesdale that part of their money is no longer covered.

Under the Financial Services Compensation Scheme (FSCS), savers are guaranteed to get back the first £ 85,000 of their savings (£ 170,000 for shared accounts) in the unlikely event that their bank or building society collapses.

Under the terms of the Financial Services Compensation Scheme, savers are guaranteed to get their first £ 85,000 of their savings back, in the unlikely event that their bank or building society collapses

Under the terms of the Financial Services Compensation Scheme, savers are guaranteed to get their first £ 85,000 of their savings back, in the unlikely event that their bank or building society collapses

Under the terms of the Financial Services Compensation Scheme, savers are guaranteed to get their first £ 85,000 of their savings back, in the unlikely event that their bank or building society collapses

The limit covers all the money you have with this institution: easily accessible accounts, fixed income bonds, ISAs, termination accounts and even your checking account.

You get extra protection after a significant event, such as B. the sale of a home or a high insurance payment. There is a £ 1m limit for savers in this position.

Most confusing, however, is what counts as an institution for many. All this is based on the Bank Watch issued by the City Watchdog.

Many banks share a license with others in the same group, while others act alone.

The acquisition of Virgin Money by CYBG established the UK's sixth-largest bank with assets of £ 84 billion and around six million clients.

Over the next three years, all customers will switch to the more popular Virgin Money brand. Branches are also renamed Virgin Money.

However, the message from both CYBG and Virgin Money is that savers do not have to do anything since their compensation coverage is the same as before the takeover.

This is because the Combined Group continues to operate with two separate licenses – one for Virgin Money and one for CYBG. Clydesdale and Yorkshire Banks are already sharing a license.

That could change in the future. A spokesman for Virgin Money told Money Mail, "If there were any changes, we would notify customers."

However, Holmesdale BS savers, now part of Skipton BS, should now act if their combined savings with both companies after the merger exceed the compensation limit.

Skipton says that savers in this position can remove money from their accounts without receiving the usual announcements.

It also waives penalties that customers normally pay for early withdrawals.

Savers need to move their money before December 31st. Wait longer and you will face the usual penalties.

Any monies paid in the last week by Monzo Bank to the new easy-access account will be subject to the same license as Investec Bank, where your money will be deposited.

The rest of your money at Monzo – for example in your checking account – is under its own license and has its own limit of £ 85,000.

sy.morris@dailymail.co.uk

Leave a comment

Send a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.