Foreign Perspectives

One thing’s for sure: the weather doesn’t mess around over here – it’s either one extreme or the other.

We’re just through a really major thunder and lightening storm the like of which you just don’t see in Northern Ireland.

All being well normal south of France weather will be resumed tomorrow with the sun and cloudless skies that usually characterise September here.

That’s the question we’re asking everyone that comes here at the moment.

A few weeks ago, Poland unexpectedly moved into the starting grid when a Polish family assured us that they do a “proper” Christmas with Christmas trees and carols.

The Belgium family with us tonight have moved that country up a few notches though. Belgium is a slightly peculiar amalgam of France and Holland and therefore takes traditions from both sides. Net effect? They do Christmas in the way us northern Europeans/Anglosaxons expect and also do New Year as the French do.

Germany is still in the running though we’ve not had any Germans staying for a while so we’ve had to start researching the options ourselves.

How to get there is the next issue to think about. Pricing-wise there’d be little in it between driving to Belgium or southern Germany as compared to flying there but either would take us around 12 hours of driving ie two days and probably around EUR 100 each for petrol and tolls.

Unless you’re planning on putting the cash under the mattress, you’re going to need another bank or building society to put your money in when you take it out of the Northern Rock, but which one?

Many people will just look up the best buy tables and find that ICICI bank is right up there at 6.3% and move it right over. Somehow I’m not totally sure that putting your life savings in an Indian bank is such a good move.

Next choice would be West Bromwich though that’s a fairly small building society, whether they could cope with the arrival of ex Northern Rock customers is another matter.

Bank of Scotland seems the best bet to me with 6% from £5000 although that limits you to 4 withdrawals per year before the rate drops substantially.

But if you’re looking for absolute security, there’s only one choice: National Savings. 4.1 % from £5000 on their Investment Account, 5.15% from £50,000 on their Easy Access account. Deposits with them are effectively deposits in the Bank of England which can’t go bust. You can open these in the Post Office or online (note: these accounts are not the same as the Post Office savings account).

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.