Q&A: What the nationalisation means for UK savers

The nationalisation of Anglo Irish Bank will affect a large number of UK savers who put their money into the bank after it offered some of the most competitive rates on the high street and promised to offer a 100 per cent money back guarantee.

Although the bank has only seven branches in England and Scotland and one in Belfast it still has approximately 100,000 savers. These are a substantial chunk of the bank’s 240,000 ordinary savers and provide half of its customer deposits of just over €19bn.

If you’re one of these savers and are concerned about what’s happening, here is a guide to what it means.

Is my money safe?

Don't panic. The nationalisation of Anglo Irish Bank should not mean that anything will happen to your money. The Irish Government is now backing the bank and says that business should continue as usual. It has said that people’s accounts will not be affected by the change and that their cash will remain secure.

I’m worried, can I get my money if I want to?

Yes, you can. There has been no freezing of accounts so depositors and creditors can still transact as normal and anyone that wants to take their money out should not have a problem doing so.

What should I do, should I take my money out while I can?

There’s no need to take your money out. Kevin Mountford, head of banking at moneysupermarket.com, said: “Naturally any savers with Anglo Irish may be concerned about the saftey of their money but it’s worth noting that the government guarnatee means their deposits are fully protected.”

Also, because many of the accounts are fixed term bonds and accounts, if savers take their money out now they will not benefit from the high rates of interest and will face paying a high penality for withdrawing funds.

Now it has been nationalised will the bank continue to offer a competitive rate?

The rates have not moved this week but that could change as rates are reviewed. However, at the moment the rates sill remain very competitive, says David Black, principal banking consultant at Defaqto research centre. “It is sill offering some of the best interest rates including the one year fixe rate bond at 4.6 per cent, the two year fixed bond at 4.2 per cent and the three, four and five year bonds at 4 per cent. All need just a minimum of £500 deposit to open one.”

Is my money guaranteed?

The Irish government has promised to protect all savers’ money until 2010, and any UK accounts from Irish Banks such as Anglo-Irish, get this protection. One thing savers do need to remember, however, is that this protection comes from a smaller European country than the UK so you will need to ask yourself how sure you are the Irish government can back it up, before relying on it the same way as UK protection.

In the UK, most banks and building societies, are covered primarily by the Financial Services Compensation Scheme which will protect the first £50,000 on deposit if the bank goes bust.

Are there any wider implications?

Kevin Mountford, head of banking at moneysupermarket.com, said: “The nationalisation shows that, after the financial bloodbath that was 2008, there is still worse to come. It’s no secret that Anglo Irish has been in trouble due to the scale of its lending exposure and the reputational damage it suffered due to the ‘secret loans’ fiasco, so it’s no big surprise it has been taken under the Irish government’s wing.”