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| Version 6 | Version 7 |
|---|---|
| UK seeks German savings clarity | UK seeks German savings clarity |
| (20 minutes later) | |
| The UK Treasury is trying to establish the details of what appears to be a German plan to offer a 100% guarantee of its private bank deposits. | |
| The UK is to increase its cap on the amount of savings it will protect from £35,000 to £50,000. | The UK is to increase its cap on the amount of savings it will protect from £35,000 to £50,000. |
| But a German decision to back all its savings would be likely to increase pressure on the UK to do the same. | But a German decision to back all its savings would be likely to increase pressure on the UK to do the same. |
| BBC business editor Robert Peston said there was confusion at the Treasury over the specific details of the plan. | |
| He said should German Chancellor Angela Merkel be offering to underwrite the retail liabilities of German banks, it would reverberate all over Europe. | He said should German Chancellor Angela Merkel be offering to underwrite the retail liabilities of German banks, it would reverberate all over Europe. |
| Leaky borders | Leaky borders |
| He added in such a situation, the UK would be expected to make a similar guarantee. | He added in such a situation, the UK would be expected to make a similar guarantee. |
| "If it turns out that [Germany] are guaranteeing all retail deposits, then I think it is inevitable that we will have to follow suit, because money leaks across borders like a sieve in these globalised markets. | "If it turns out that [Germany] are guaranteeing all retail deposits, then I think it is inevitable that we will have to follow suit, because money leaks across borders like a sieve in these globalised markets. |
| "There is a risk money would flow from the UK to Germany if we didn't offer the same kind of protection." | "There is a risk money would flow from the UK to Germany if we didn't offer the same kind of protection." |
| Chancellor Merkel: Your deposits are safe | Chancellor Merkel: Your deposits are safe |
| Ms Merkel's comments about German savings came after it emerged that the country's second biggest commercial property lender, Hypo Real Estate, was struggling to stay in business. | Ms Merkel's comments about German savings came after it emerged that the country's second biggest commercial property lender, Hypo Real Estate, was struggling to stay in business. |
| "We tell all savings account holders that your deposits are safe. The federal government assures it," she said. | "We tell all savings account holders that your deposits are safe. The federal government assures it," she said. |
| But it remains unclear at this stage exactly how far those guarantees will go. | But it remains unclear at this stage exactly how far those guarantees will go. |
| In the UK, Chancellor of the Exchequer Alistair Darling has repeatedly pledged that he will do "whatever is necessary" to maintain stability in the British financial system. | In the UK, Chancellor of the Exchequer Alistair Darling has repeatedly pledged that he will do "whatever is necessary" to maintain stability in the British financial system. |
| Last week, the Financial Services Authority said it would be raising the limit on the amount of deposits that are guaranteed should a UK bank go bust from £35,000 to £50,000, per banking group, from this Tuesday. | Last week, the Financial Services Authority said it would be raising the limit on the amount of deposits that are guaranteed should a UK bank go bust from £35,000 to £50,000, per banking group, from this Tuesday. |
| Paris meeting | Paris meeting |
| Greece and the Irish Republic have already announced they would guarantee all savings. | Greece and the Irish Republic have already announced they would guarantee all savings. |
| Earlier, Lib Dem Treasury spokesman Vince Cable told the BBC that the UK could resist following their lead but a German announcement would be more difficult to ignore. | Earlier, Lib Dem Treasury spokesman Vince Cable told the BBC that the UK could resist following their lead but a German announcement would be more difficult to ignore. |
| "As long as it was the Irish and small countries, in a way this could be fended off, but Germany, of course, is a very big player and I fear that the British government may have to follow suit." | "As long as it was the Irish and small countries, in a way this could be fended off, but Germany, of course, is a very big player and I fear that the British government may have to follow suit." |
| He added: "People are anxious, there is a danger that if one country, a major country like Germany, offers blanket protection and others don't, you then get an out-flow, so the British government will almost certainly have to follow. " | He added: "People are anxious, there is a danger that if one country, a major country like Germany, offers blanket protection and others don't, you then get an out-flow, so the British government will almost certainly have to follow. " |
| Analysts believe Ms Merkel was forced into moving to reassure savers as Germany's second-largest mortgage lender Hypo Real Estate was found to be teetering on the brink of bankruptcy. | Analysts believe Ms Merkel was forced into moving to reassure savers as Germany's second-largest mortgage lender Hypo Real Estate was found to be teetering on the brink of bankruptcy. |
| Her move came a day after leaders of the major European economies met in Paris for talks on measures to halt the global credit crunch. | Her move came a day after leaders of the major European economies met in Paris for talks on measures to halt the global credit crunch. |
| Britain, Germany, Italy and France agreed to work together to support financial institutions and bring in more regulation. | Britain, Germany, Italy and France agreed to work together to support financial institutions and bring in more regulation. |