1.25% p.a. offer from Lloyds TSB

[Meowlover]

Saw an ad in today's paper for a Limited Offer 1.25% p.a. on a 3-month term HKD term deposit from Lloyd's TSB. I know 1.25% is not very much, but it's many times more than I'm getting for the funds sitting in my savings account.

Noticed the fine print says that the amount in excess of HKD 100,000 is only covered by the HK SAR Government's Exchange Fund until the end of 2010 though. I know that Lloyd's was one of the banks bailed out by the UK govt, what are the chances they could go under? Is it worth that risk to get 1.25% p.a.?

[Oldtimer]

I think the limit has been raised to $500,000 after Dec. 2010

[Clockie]

Hi
But is it worth the risk??? I dont think so as I was of the same opinion as you cat lover.

[Oldtimer]

If the amount is less than HK$500,000 then it is guaranteed by HK Government. So where is the risk?

[Clockie]

This is like a FDIC in the USA. Make a claim when a bank has gone bust and you may wait 99 years for the Gov pay backand you know what that will be worth. This bank had to be bailed out recently. Would you invest in a business that had recently gone BANG ???

[fth]

One of the big reasons for the bailout was a disastrous merger between Lloyds and HBOS (if you thought bankers give bad financial advice, try politicians). Despite this the bailout was less severe to shareholders compared to RBS, and the group carried out a successful right issue.

Their share price has recovered somewhat as well LLOYDS GRP. ORD 10P Share Price | LLOY.L - Yahoo! Finance UK

There are fears however that the property market in the UK will remain weak, potentially leading to more bad loans.

[Clockie]

A rose by any other name is still a rose, and a bail out etc. Don't worry the share and housing prices will come roaring back after October.

Regards

[hlfo718]

The bank currently has a market cap of $82 billion. It is highly unlikely at this point it will go bust and you lose 100% of your money. If the bank gets in trouble again, the gov't will take it over and your deposit will be 100% backed by the UK gov't. Just look what happened to Citi and AIG. Keep in mind Lloyds is a bank, so if it goes bust and the gov't won't step in, there will be a major riot in the UK.

[ghkg]

State Bank of India ,Hong Kong got better interest rate...HKD 1 year 1.75% 2 years 2.25 , etc..
State Bank of India, Hong Kong