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Santander Warning - How a UK Bank Deposits Freeze Will Happen!

Personal_Finance / Credit Crisis 2013 Apr 03, 2013 - 02:26 AM GMT

By: Nadeem_Walayat


Whilst Cyprus continues to come to terms with it's banking catastrophe that involves the extreme step of outright theft of depositor funds as the following real life example illustrates to what amounts to an 85% theft of this customers bank balance at Laiki Bank actually looks like -

Source - So, What's It Like To Have a Business in Cyprus Right Now?

Writes the account owner:

"Most circulating assets on our business Current Account are blocked. Over 700k of expropriated money will be used to repay country's debt. Probably we will get back about 20% of this amount in 6-7 years.

I'm not Russian oligarch, but just European medium size IT business. Thousands of other companies around Cyprus have the same situation.

The business is definitely ruined, all Cypriot workers to be fired. We are moving to small Caribbean country where authorities have more respect to people's assets."

UK Banking Freeze

UK depositors are also at risk of a banking freeze which will manifest itself as -

  • Locked out of online access to your bank account without any prior warning.
  • Limited to ATM cash withdrawal limits.
  • Inability for bank staff to achieve account access for transfer of funds.

That is how a banking freeze will manifest itself not at some future date but this is what customers of Santander may be experiencing right now.

Are Your Deposits Safe in Santander?

The credit ratings agency such as Moody's (for what their worth) rate HSBC, Royal Bank of Canada and JP Morgan at the highest end in terms of credit worthiness, the next tier comprises the likes of Barclays BNP Paribas and Goldman Sachs, the bottom tier includes the likes of RBS, Bank of America, Citigroup, LLoyds HBOS and Santander. Despite credit ratings agencies being several years behind the curve they can still be useful as a good guide towards the relative quality of customer service that one can expect, especially as the lower rated banks will tend to be cash starved and therefore more eager to cling onto to customer deposits / seek government bailouts then other banks.

Santander effectively froze our business bank account (as a legacy account holder following their takeover of Alliance and Leicester) on 22nd March 2013 following an attempt to transfer out a significant sum as part of a Financial Armageddon plan in the wake of the collapse of Cypriot banking system.

However customers first experience of being locked out of their online accounts isn't a message to get in touch for x,y,z reason but rather a highly misleading notice of a planned maintenance that still remains nearly 2 weeks on.

Or what may be perceived as more troubling during subsequent log on attempts is Santander's "Internal Server Error" page, which in the wake of the Cyprus banking crisis is not exactly confidence inducing as it resembles that of one of those dodgy website's that sell you something, take your money and then disappear.

Santander has to date FAILED to provide any written correspondence to notify of account suspension and what needs to be done to reactivate the account. Thus the only way to realise the status of the account is phoning the bank to question the perpetual maintenance page, in response to which I was informed that to regain access to the account I would need to visit a local branch with ID.

The visit to a local branch in Sheffield took place on Thursday 28th of March during which time the staff member informed me that the account was now fully operational and that the transfers that had been suspended a week earlier had now been initiated.

However some 5 days later, these statements have continued to turn out to be untrue as the account remains frozen with no transfers out having been made.

Therefore how can anyone have any faith in a bank when the staff ms-lead customers in the name of clinging onto depositor funds at times of credit crisis extremes?

In summary

  • Santander suspended the account on 22nd March 2013 at the height of the Cypriot banking crisis to cling on to funds that were being transferred out with a misleading page that the bank is undergoing maintenance.
  • Subsequently telephone banking has failed to have online access restored.
  • A branch visit with passport ID has failed to get access restored despite the branch staff ms-informing me at the time that full access had been restored.
  • And to date there has been no written correspondence from Santander with regards the status of the account.

If you bank with Santander than it is likely you will continue to have access right up until the point you attempt to transfer a large sum of money out.

So in answering the question can Santander be trusted with your deposits, my answer based on recent experience is NO!

If Spain's banking system collapses (which it could do) then your deposits are at risk in the first instance of being frozen, locked out of funds in what amounts to an extended bank holiday after which funds will likely be subject to capital controls to prevent a run on the bank Cyprus style, in the meantime Santander continues to play games in preventing large transfers out of Santander bank accounts.

Ensure you are subscribed to my always free newsletter to be in receipt of my next in depth analysis which reveals the Bank of England's secret plans to steal your bank deposits as well as the potential for Silver as an investment or not.


Nadeem Walayat

Copyright © 2005-2013 (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of four ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series.that can be downloaded for Free.

The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2015 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


03 Apr 13, 11:50
Bankrupt banks!

Dear Nadeem

May I first say how genuinely sorry I am to hear of your troubles with Santander. I have been quietly following your comments over the last few weeks with interest and sympathy.

I remember once when one avid reader kept asking you (reasonably in my view) why the commodity stocks kept making new lows despite all the inflation you have been talking about for years now. They were just refusing to go up despite new stock market yearly highs! I remember this person kept asking you and I did try to help by trying to invoke the theory that USD would be the last to fall in similar analogy to the playground bully who just takes from the rest of us without ever giving anything back. Perhaps, this is why if Governments had just printed money over the last century their debts would be 30% lower than they are today because of the deceitful interest which is paid to the criminal banking cartel and the fraudulent fractional reserve system which we all suffer. Unfortunately, this could never be allowed to happen.

I wonder how many people study history before parting with heir hard earned taxable income when they play the casino stock market system? Do they understand that big capital seeks safety and refuse in first public assets (e.g. Government paper) before moving to private assets as Governments run out of other people's money....this is what is starting to happen now.

The US has the deepest debt markets and is the reserve currency (it is the biggest bully in my analogy above). Therefore capital will seek safety in USD and Government bonds and then USD related private assets before the whole system blows up (or not). Silver and gold is thus not a play until it has been broken and the safety of USD related assets starts to waiver. IMHO. Then commodities, gold and silver play catch up in a relatively very short amount of time. USD is the play meanwhile. Sorry to annoy those behind the curtain. Many will not understand this until it is too late insisting that all this Federal Reserve money printing MUST devalue the dollar. It will eventually. It is just TIME.

Anyway, the reason I write is to sympathise and to ask the following questions if I may:

1. What do you think the % probability is that we experience a Cyprus style banking theft in our high street banks?

2. What should the hard working UK citizens do before this happens other than transfer their money to perceived safer banks which is not a suitable option in light of recent events?

3. Could you elaborate on what you mean by the Bank of England's "secret plans"? Just a quick elaboration before your article. Thank you.

4. Do foreign currency accounts afford a greater level of protection if people want to spread some risk by having US dollars as sterling continues along its rapid decent?

I do appreciate your comments and foresight. It is a real pity that the Internet did not warn of any impending Cypriot bank theft before it happened....yet many influential people were aware of this and secretly got their billions out weeks before this crisis. We live in a truly manipulated world...and obviously a manipulated Internet! Some of your articles are therefore refreshing. Thank you.

What interesting times we live in....


Richard Pitwood
03 Apr 13, 12:53
Satander Gets out of FSCS Depostor Protection Scheme

Santander have managed to get out of cover by the FSCS,


1 b) Your Money

Any money held for you in an account with Santander UK plc will be held in its capacity as a bank and not as a trustee. In accordance with FSA requirements we areobliged to notify you that the client money rules on money do notapply to a Banking Consolidation Directive (BCD) in relation to deposits within the meaning of the BCD held by that institution. As a result, the money will not be held within the client money rules of the FSA.’

I thought Santander couldn’t wiggle out of the FSCS because it applies to small businesses like it does for personal accounts, but no that's not the issue:

This link has the following: (from section 4.1.2, see part 3a below)

The client money rules do not apply with respect to:

(1) the permitted activities of a long−term insurer or a friendly

society; or

(2) coins held on behalf of a client if the firm and the client have

agreed that the money (or money of that type) is to be held by the

firm for the intrinsic value of the metal which constitutes the coin;


(3) money held by a firm which is an approved bank, but

only when held in an account with itself, in which case the firm

must notify the client in writing that:

(a) money held for that client in an account with the

approved bank will be held by the firm as banker and not as

trustee (or in Scotland as agent); and

(b) as a result, the money will not be held in accordance with the

client money rules; or

(4) money held by depositaries wh….

So all they need to do is inform you they are ‘holding it as a banker’ instead of ‘holding it as trustee’ and you are not covered!


Richard Pitwood

03 Apr 13, 15:33
UK Banking Risk


The cyprus crisis is only beginning, much worse is yet to come.

Luckily I recognised the risk a good 2 years ago and therefore have been engineering escape velocity out of the banks.

The risk has been high for a good 2 years and is STILL increasing.

1. At the end of the day I expect they will recapialise the banks with printed money so it will result in an explosion of inflation. But they will freeze the funds during the period of INFLATION then whenn you get access to your funds it will be under capital controls i.e. they will restrict cyprus style how much can be withdrawn so that high inflation, perhaps 10% per MONTH EATS its value away to nothing.

2. Have to move funds to inflation proof assets thats property, scarce commidities and dividend paying stocks.

3. Bank of England documents imply that depositors may be bailed-in to future bank rescues Cyprus style.

4. I would invest in foriegn stocks rather than foriegn currencies as all currencies are in freefall against one another. so investing just in currency will not work.



05 Apr 13, 10:40
Satander Update

All's well.

Full account Internet access restored, Santander have taken onboard feedback specifically concerning

1. The misleading maintenance page.

2. And to look into why the branch visit failed to get access restored.

Santander also stated that one of the reasons for the block was because they could not get through to me on the phone on the 22nd of March.



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