Foreign Perspectives

Archive for the ‘Business’ Category

When a bank announces that it has a problem, the first reaction of just about everyone is to take out their money and put it somewhere else, but should you do that?

You’ll probably have heard that there’s “no problem” and that the Bank of England won’t let any bank go bust. Well, as it happens they most definitely have let banks go bust in the past. Not terribly often, granted, and the last time was with BCCI way back in 1991 in somewhat different circumstances but you certainly can’t rely on statements by various people who say that the BoE would never let a bank go bust because they are wrong: it has. More recently, Equitable Life has also been allowed to, in effect, go bankrupt.

If you’ve got a large chunk of your life savings in the Northern Rock you’d be crazy to rely on people just assuming that the Bank of England won’t let them go bankrupt. If you couldn’t do without that money, take it out.

Won’t that make life more difficult for Northern Rock? Yes, it certainly will. However, even if everything works out, chances are that within the next few days you will find that the conditions on your instant access account have been changed so that you need to give them notice to withdraw the money. Do you really want to take the chance that things won’t “work out”?

What should be learnt for this lesson is that you should NEVER keep all your money with one financial institution no matter how good their reputation (and don’t forget that the reputation of Northern Rock was very, very good). The maximum payout should things go really badly wrong is £18,000 £31,700 (100% of your first £2,000, 90% of the next £33,000).

What’s really likely to happen?

Last time this kind of thing happened was in 1991 with the Town & Country Building Society (the 15th largest society in the country at the time) which was subsequently taken over by the Woolwich (now part of Barclays Bank) in a rescue operation. Something similar seems likely to happen in this case too although it’s more complicated in some ways as the Northern Rock is a listed company rather than being a mutually owned building society.

We’re just beginning to get our heads above water and wondering how we did (no time for that in mid-Summer!).

June was down a little as could be expected as I was off in Belfast for almost all of it which meant that we needed to leave our availability a little bit more loose than we would do normally ie we couldn’t list more rooms than we actually have as we normally do over the Summer. If you’re doing that, you really need to be on top of the bookings as they come in and close down availability on systems as you fill up.

July was also down a little as I wasn’t back ’til the end of the first week so same problem as June. Also we had the first “visa booking” of the year: 20 days in a row and cancelled just a few days in advance. As a consequence of that, we’ve tightened up considerably on potential “visa bookings”. When we get one, we give them two options: 1) pay the full balance and we help you get the visa or 2) we cancel the booking and inform the French embassy. We’re currently sitting with two of these; we fully expect the South African to cancel in that she’s made no acknowledgement of any of our e-mails. Hard to say about the guy from Barbados as he has been very keen to pay the balance.

We’d fewer Visa pour l’Image bookings than expected but then we were quite full over that week with other people so didn’t really have the availability for any more people.

So far, it’s very hard to say how the rest of the year will turn out. We’ve nothing for November or December which isn’t unusual but the bookings for October are also fairly low for this time of year.

The pattern of bookings from the Spanish is quite different from all the other nationalities that stay with us.

For everyone else, the bookings are spread right through the year, albeit with a lot more people coming over the Summer peak. However, with the Spanish there are a series of periods of one or two days when all of a sudden we’re almost completely full with bookings from Spain.

We thought we’d gotten used to the general pattern of these bookings last year ie lots around January 5th, the week before Easter and one other weekend but this year we’re getting a lot more of these clumps. Why? We’re not completely sure but it looks like one of the sites that we list with has bumped up their promotion in Spanish markets.

One of the odd things that I’ve noticed since I’ve started doing the paid posts on a more serious basis is that there are quite a number of pretty much insignificant websites which are trying to promote themselves via paid posts.

Where on earth are they getting the money to do it? We’re not talking websites run by anyone famous, just those run by ordinary people like myself.

It costs an absolute minimum of $10 per post that they pay for yet some of the promotions have ran for a week or more over which time presumably dozens if not hundreds of blogs have taken them up on it. Now, I’ll grant that all of the personal promotions that I’ve seen have stuck to that minimum, but even so 10 blogs taking them up means $100.

Can it really be so profitable in terms of the additional traffic (and hence advertising revenue) that paid posts bring for even a personal blog to do such things?

Not that I’m complaining of course. After all, the $5 or so that I receive for writing 50 words for one of those may as well be in my pocket as someone elses. I am curious though as to the economic viability of the whole thing though and may well dip an experimental toe in the water to try it out for some of my listings sites at some point.

One thing never to neglect when you’re living abroad is the cost of changing money from one currency to another yet virtually nobody considers it.

The costs can be quite substantial too. A friend of mine who was living in Brussels once casually remarked that he just used the Halifax as he did at home, lifting EUR 20 or EUR 30 whenever he needed it. He was more than a little takenaback when I pointed out that by doing that he was paying around 10% of his entire salary in bank charges. Yes, that much.

We’ve had quite a run of Brits living in Spain stopping with us on their way to/from the UK this year and I was very surprised to find that only one of them used the Nationwide credit card. Yet, that’s the only one that offers free exchange from sterling to other currencies (and all of the people concerned were living on a UK based income).

The other alternative for euro-zone countries is the Halifax which operates as Banco Halifax in Spain. They offer free transfers from UK based Halifax (and Bank of Scotland) accounts to Halifax in Spain. Although they don’t currently operate elsewhere in Europe, the Spanish outfit is quite sufficient for those in eurozone countries as you can, of course, use the supplied debit card outside Spain for purchases (it’s a bit expensive for ATM withdrawals outside Spain).

Very handy and the whole thing operates in English.