100% savings guarantee as London Scottish Bank goes bust

Monday, 01 December 2008 11:02

London Scottish Bank has gone into administration with the government offering a 100 per cent savings guarantee.

The Financial Services Authority said the Manchester-based bank, which mainly opened credit to low-income earners, had been prevented from accepting further deposits yesterday.

"It was placed into administration later that evening by the court on the application of its directors," a statement explained. "Ernst and Young has been appointed as administrator."

The bank has more than 10,000 depositors, but the FSA confirmed savers would not lose a penny.

The Financial Services Compensation Scheme (FSCS) has already been triggered, guaranteeing retail deposits up to £50,000.

But the chancellor Alistair Darling said he was guaranteeing savings above the official level as well.

"Eligible retail depositors will be compensated through the FSCS with HM Treasury protecting balances above the current UK deposit limit of £50,000," the FSA added.

"The FSCS will administer the full payout of deposits."

London Scottish is also sending out the message that current - with the business being run by administrators - it is "business as usual".

A statement on the firm's website from adminstrators says: "The company has not ceased to trade.

"The administration is necessary because of the company's financial position and to ensure that it can continue to operate, and to ensure the best interests of customers and creditors are served.

"Finally, we would like to re-iterate that our key objective is to stabilize the underlying businesses. During this process we would ask for all of your support during the continued operations of the company, whilst a buyer or buyers are sought for the remainder of the company's business."

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