I’m sure I don’t need to speak about the current global economic issues, though maybe for our American readers it is pertinent to mention that this crises does stretch outside of America. Most notably of late is the Icelandic economy which is probably one of the worst hit outside of the United States.

Both of it’s big banks, Kaupthing Edge and Icesave have been big business here in the UK for their very attractive interest rates, however, both are now in extreme difficulty. As a Kaupthing Edge customer I am going to concentrate on their current situation and how this crisis affects us here in the UK. The Icelandic government’s promised to protect all Icelanders’ savings but this isn’t thought to extend to UK savers. However, Kaupthing Edge was regulated by the Financial Compensation Scheme which has recently been extended to £50,000 per customer per bank. Quite simply, if you have less than £50,000 in Kaupthing Edge then you are 100% safe.

Luckily you don’t need to look into financial compensation as of the 8th October 2008 Kaupthing Edge is now owned by ING Direct as discussed in a statement from HM Treasury:

Kaupthing Edge deposit business has been transferred to ING Direct, a wholly-owned subsidiary of ING Group, which operates through its branch in the UK. ING Direct is working to rapidly ensure that it is business as normal for all customers.

Is my money safe now under ING?

Essentially yes, although ING has confirmed that we are now protected under the Dutch Investor Protection Scheme. Note that this is now a UK protection scheme and in the very unlikely event ING was to go bust, 100% of the first €100,000 (approx £78,000) will be covered. However, the claim for this money will need to be made with the dutch authorities.

I know this article isn’t about ICESAVE but what about them?

Well if you were with them you really were in trouble and the bank is now in the hands of the Icelandic government. However, the UK government today announced that it will secure all deposits with 100% backing:

The UK authorities expect that Landsbanki will soon be declared in default. Should that occur, the Chancellor has put in place arrangements to ensure that no retail depositor will lose any money as a result of the closure of Icesave. The Treasury and the Financial Services Compensation Scheme are working with the Icelandic authorities and their Deposit Insurance Scheme to ensure that depositors are paid back as quickly as possible. The Chancellor has also spoken to the Icelandic Finance Minister about the importance of the Icelandic authorities ensuring that UK depositors in Icesave are given the same protections as depositors in Iceland and receive their deposits back in full promptly.

So there is no need to panic with either of these banks. However, it will be interesting to see what ING Direct does with our interest rates and at the time of writting this article I am still trying to contact them to find out. Obviously today is not a good day to do so as the number is permanently engaged, however, if you have any worries or concerns as a Kaupthing Edge Customer you can contact them on 08451 31 32 34. You can also find more information HERE.