Thursday, 26 February 2009

£2.3bn bank run

Savers in the UK have withdrawn £2.3bn in January this year:

Savers' £2.3bn bank raid after rates slide

Banks were put on red alert today after customers withdrew more than £2bn from savings accounts in just one month.

Industry figures showed deposits at High Street banks fell by £2.3bn in January, the first significant drop since 1999 and the largest since British Bankers' Association (BBA) records began in 1997.

BBA statistics director David Dooks advised against reading too much into one month's figures, particularly as deposits rose sharply in November and December. However, he warned that if withdrawals continued, banks could face a fresh funding crisis and reduce lending even further.

Ben Yearsley, an investment manager at Hargreaves Lansdown, said savers were moving funds from cash Isas and other savings accounts with banks to the stock market as well as to corporate bonds and gold.

He added: 'They are looking at the returns they are getting and thinking they are diabolical. There was a big shift in January, and February is running on a par with January. There is also nervousness about the banking system, so people are withdrawing cash.'

Sounds like a bank run to me!

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