Bradford and Bingley offshore

[Panic or Not]

What does anyone think about the problems with B&B? Savings accounts are protected up to GBP35k - but off-shore accounts are different - according to their website, under Isle of Man law, only 75% of the money in their off-shore accounts are protected.

Should I be panicking and withdrawing my money??

[kaki11]

At this stage I don't think B&B have a liquidity problem - they have claimed to be funded into 2009. Their big problem is non-performing assets which will lead to write offs and an erosion of their equity which the rights issue is supposed to restore.
Of course, you might not trust a word they say and if they administer depositors' accounts like they have seemingly controlled the overall business, then depositors may well take flight. 

Given that the FSA reportedly held talks with the various parties (including the underwriters who were going to back out of the rights issue until the deal was re-priced) the FSA has a lot of face invested in a successful outcome. I'm not sure if the FSA can commit the BoE to rescue a bank and I am not sure why it got involved at this stage unless it was to prod B&B into letting the underwriters off the hook.
If B&B does in due couse need liquidity support from the BoE, I'm sure it will get it especially as the FSA has got involved. It seems that the FSA, BoE and Treasury are playing a political power game. The BoE was screwed by the Treasury on Northern Rock and now the FSA is screwing the BoE on B&B.
However, one thing the Treasury might do when the next bank fails is to limit HMG guarantees to the depositor limits and not to include all and sundry creditors of the business. Thus, whereas commercial lenders to Northern Rock were guaranteed (stupidly), I don't think the Treasury would do the same again. Offshore depositors might then also take a bath.
Expect the BoE to really hammer home on inflation and keep interest rates up and if the US dove on the MPC would go home, I'm sure the BoE would try to get rates higher, just to spite the government. 

[stock punter]

good writeup kaki

however, just to comment on your assertion that commercial lenders to NR were "stupidly" guaranteed... this is no charity by the Treausry or Bank of England.  The simple reality is that had these commerical lenders been made to lose out, it could have triggered a massive run by the institutional investors on the other building societies (B&B, A&L) and even the banks (say HBOS) who are all dependant on wholesale funding as well.  It is this nightmarish scenario that the Treasury/BoE tried to avoid (and so far, successfully so), by effectively implying that there is no risk to continue lending in the wholesale markets to british financial institutions

[move it]

With NR it was basically a self fulfilling prophecy.  Same with Bear.  Don't be the last in the queue.

[kaki11]

I agree with you 2020. If in doubt, and if B&B is involved, then trust your instincts.
Offshore depositor protection is 75% of balance up to GBP20,000 (i.e. max amount received back would be GBP15,000) in the Isle of Man.
For Channel Islands there is no deposit protection.
For offshore accounts, it is also worth checking if the offshore entity is guaranteed by a sizeable UK parent rather than just being a subsidiary. If HSBC Bank International (in Jersey) collapsed, there is no legal recourse for recovery to the larger HSBC banking group. HSBC Bank International is an indirect subsidiary of HSBC Bank plc and has a notional GBP1m of issued capital.
By contrast HSBC in Singapore is a division of the Hongkong and Shanghai Banking Corporation Limited. So if HSBC Singapore collapsed you would as a creditor, in effct, share in the assets of the Asia chunk of the HSBC empire. If your depostit is in SGD, then a depositor in HSBC SG would have some recourse to the protection scheme here (up to SGD 20,000 - I think).

[Panic or Not]

Thanks very much everyone for the detailed replies. I'm tending to agree with the majority - I can't afford to risk it....I will be faxing my withdrawal letter to them tomorrow morning.

Thanks again.

[stock punter]

wasn't quite clear in my answer, but frankly I also agree with your decision... why lose sleep over a few basis points?  I just wanted to comment about the often mentioned sentiment in the press that creditors to NR (or Bear Stearns) were unjustifiably bailed out.  In reality it is far more complicated

[what about....]

Places like Citi here.  They are nearly out of tier one capital I believe (globally).  Also a few years ago I believe they got ring fenced from their parents so no recourse.  What happens if they go pear shaped (not just them but other foreign but local banks if that makes sense).  I reckon a bunch of banks will take big hits here over the next year or two so what happens.  Does SG govt guarantee, just local local banks or what?

[Depositor's insurance]

MAS is currently implementing a depositor's insurance scheme here, but I think it's to a total value of S$20k across all accounts (someone in the know may want to correct the figure), but it's a pretty paltry sum.

Having said that though, I'm leaving a large amount of GBP on deposit with DBS.  Get a good rate and I'd be mightily surprised if Sg Gov would let DBS go under.

[kaki11]

As I comment above, MAS/Singapore depositor insurance only applies to SGD deposits. For the rest you are at the mercy of the banks' credit worthiness. Given that OCBC and DBS have just raised a combined S$2.5bn in preference shares, which are subordinate to your deposits, then there ceraintly is more cushioning to protect you.
Of course if property values in SG are in the process of plummeting 30% (see Kubes's stuff), then this equity cushion may be needed by the banks to protect their capital base although I have not done any NPL provisioning estimates to support this concern.
DBS acquired POSB cheaply from the government in a fortuitous manner after the last Asian crisis. Furthermore, given that Temasek has put money into propping up overseas banks, I am sure charity will return home very swiftly to support any domestic banking hiccups.