Most banks looking for deposits from UK consumers have a UK banking licence and deposits with them are covered by the UK Financial Services Compensation Scheme (FSCS) for up to £85,000 per person (reducing to £75,000 per person from 1 January 2016).

However, European banks are also allowed to operate in the UK under their home country’s regulations. This is called passporting.

The main differences affecting consumers is that these passporting banks are covered by their home country’s compensation scheme (up to €100,000 per person) and not the UK’s. As this limit is fixed in euros, fluctuating exchange rates mean that their cover in the UK could be less (or more) than that offered by the FSCS.

Also, should a European bank fail, compensation claims by UK customers will have to be made against the compensation scheme in that bank’s country of origin - possibly in the language of that country.

Currently, the European registered banks operating in the UK under the passporting scheme are:

*The amount is converted from euros into Swedish Kroner at the exchange rate applicable at the time at which entitlement to compensation arises.

Rachel Thrussell, Savings Insight Manager at Moneyfacts.co.uk, said:

“With an increasing number of European banks now offering competitive rates, customers need to be aware that not all savings accounts offered in the UK are covered by the UK compensation scheme.

“However, savers can be reassured that, under European Law, savings with European banks are covered by the compensation scheme of the banks’ home country, although they should bear in mind that in the event of a crisis, they could be faced with language and exchange rate issues.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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