ICICI, an Indian bank with branches in the UK, was a best buy for a long time. A large number of savers in the UK may have definitely opened accounts with the bank.  In fact, its fixed rate savings account is still in the best buy tables. The question is how safe the ICICI deposits are in light of the recent financial crisis enveloping many reputed banking and investment companies.



Is it protected in the UK?

It is mandatory by law for all non-European banks in the UK to To operate in the UK, non-European banks to have fully registered UK subsidiaries. That means if it goes bust the £50,000 per person per financial institution protection from the Financial Services Compensation Scheme (FSCS) will apply just as much for ICICI as for Barclays, NatWest or any other UK bank.

So if you have £50,000 or less in it, your cash is safe in case it goes bust. However, anything over £50,000 isn’t protected as per the FSCS laws with all other banks. Usually, it is always best to spread savings into accounts with other independent banks. In that case, all your savings up to £50,000 with all these banks are protected under the FSCS scheme.

What would happen if a registered bank goes bust?

The FSCS and the government compensation and protection could be applicable in two ways.


Option 1:

The government can simply shift the savings operation or nationalize. For example, the government fully nationalized the Northern Rock, while in the case of Bradford and Bangley, it was made to shift the savings operation over to a new big parent bank. The savings and access to the cash continue to be normal.

Option 2:

In case of a partially regulated UK bank, the government could pay out in full savings, not just the £50,000 as in the case of the Icesave from Iceland. In this case, the UK government simply promised to protect all savings.