How to keep a chunk of money safe in the UK?
February 4, 2011 2:18 PM   Subscribe

How do I safely look after a large chunk of money for a short period of time? Difficulty - I'm in the UK, and some of it isn't mine...

Following the sale of our grandparents' house, my brother and I will both be receiving cheques for around £250k in the next week. I need to find a way to keep the two lots of money safe for about a month.

My money needs to be safe for about a month until my house purchase goes through. My brother's money needs to be kept safe until he returns from foreign shores some time after Easter, and can look after it himself.

The problem is that money in UK banks is only guaranteed against financial collapse up to a limit of £50k per depositor per banking group.

I know that it's pretty unlikely that any of the banks is going to vanish, but I'd really rather not take the chance.

What can I do to protect these sums of money for 1-2 months?

The obvious additional problem is that I can't open additional accounts to protect the money that isn't for me.

Sadly, the option of sticking the cheques somewhere safe until the money is needed isn't a viable option, as the solicitor handling the estate has already warned us that their client account is liable to the same bank rules as personal accounts.
posted by anonymous to Work & Money (6 answers total) 1 user marked this as a favorite
Consider NS&I. They're backed by the Treasury, not just the FSCS. I seem to recall siting a limit somewhere of two million pounds.

Also check out The forums there might show you some leads.
posted by Solomon at 2:32 PM on February 4, 2011

Maybe a silly thought, but could you get the money in cash and put it in a safe deposit box?
posted by LobsterMitten at 4:00 PM on February 4, 2011

For yourself, make sure you don't put it anywhere in the wrong place on this list from the FSA (as they say, there are also other establishments covered by their rules, I think these are just the ones that are in groups).

For your brother, as you say, you can't go opening any accounts for him, so if he has multiple suitable accounts already it could be worth asking to receive his money as multiple cheques, so that they can be split as much as possible.
posted by Lebannen at 5:03 PM on February 4, 2011

Wouldn't power of attorney allow you to open accounts for your brother?

My brother certainly handled my banking affairs (in another EU country) for quite a while with power of attorney. Although the monies is question were 1/1000 of this most of the time, but he did have access to my accounts after I sold my condo.
posted by zeikka at 6:51 PM on February 4, 2011

The FSCS now covers up to £85k in the event of bank failure, not £50k.

So you need to open three accounts, each with £83k in to be fully covered on £250k. That probably isn't too bad. It'll cost you £30 a time to transfer all the cash.

Alternatively, you could buy a hard asset with a very liquid trading market with the cash and then hedge the currency risk by buying futures on a currency exchange (or by spread betting on the difference ). You'll lose on the round trip of course, but you'll have to accept that as the cost of insurance.

Eg. buy £250k of gold, held somewhere like Bullionvault and then spread bet on the gold price & the GBP/USD price to hedge away your gold price exposure.

To be honest though, given that you've only got to open accounts with three institutions that's probably the simpler route!
posted by pharm at 2:23 AM on February 5, 2011

If you pick one of the large institutions that have come through the financial storm, you will be fine. Also, a foreign bank might work for you, like Bank of New York Mellon. They're not going anywhere. (disclosure - I work in the financial industry)

Plus, will all the funds in one place, you'll be able to get a better return. I'd not recommend better in the market, regardless of the way gold has been going, especially since you are less experienced. If you invest in anything short term, make it treasuries or Eurobonds.

But really, keep it together, and go with someone that doesn't hit the news a lot but is large. State Street, Bank of New York, DeutscheBank... Barclays really isn't a bad choice, even with the news around them.
posted by rich at 6:32 AM on February 5, 2011

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