UK bank and building society overview: who owns who?
Many UK banks and building societies are linked, and it pays to know how.
Under the Financial Services Compensation Scheme (FSCS), for example, savers can get their money back if their bank goes bust. But coverage is limited to £85,000 per person, per licensed financial provider.
Anything more than that, spread over several linked banks, could be lost.
Knowing the market is also important for those trying to bank ethically: there's nothing more annoying than realising the alternative we've moved to is owned by a banking brand we wouldn't want to touch with a barge pole.
Read on to find out who owns whom.
UK banking groups
The following groups of banks, with the group name shown in bold, share a single banking licence.
SOURCE: Choose.net editorial team.
Note the names listed under Royal Bank of Scotland; we'll explain shortly.
While many building societies have their own banking licences, there are some that operate in groups which share a banking licence:
SOURCE: Choose.net editorial team.
Returning to the names listed under Royal Bank of Scotland above, and the lack of some familiar names we might expect to see there. Although the following banks are a part of this group, they all have separate banking licences:
- Royal Bank of Scotland
- Ulster Bank
There are also a number of smaller groups which each share a banking licence.
In most cases, these are a large bank with a smaller subsidiary, like the online banks First Direct and Cahoot.
|Bank of Ireland UK||Clydesdale Bank PLC||HSBC||Santander UK|
|AA (savings only)
Bank of Ireland UK
Note that although Santander is technically a foreign owned bank - because it's owned by Banco Santander of Spain - savings are protected under FSCS because the bank has a UK licence. See below for more on this.
Single licence banks
TSB, which was previously part of the Lloyds Banking Group, have their own banking licence, as do the following institutions:
- M&S Bank
- Sainsbury's Bank
- Tesco Bank
- Virgin Money
The inclusion of M&S Bank in this list may be surprising to some, given that customers can use HSBC's branches and facilities - but it's just like Royal Bank of Scotland and NatWest being sister banks but having separate licences.
Foreign owned banks
When it comes to FSCS protection, it's particularly important whether a foreign owned bank has a UK banking licence.
A 2012 FSCS study found that 54% of consumers would avoid putting their money into foreign owned banks, perhaps recalling the Icesave crisis.
Yet a huge number of these foreign owned banks actually operate in the UK under a UK banking licence which means that eligible customers' savings are just as protected as they would be in a UK grown bank.
Here are just a few foreign-owned banks that fall into that category:
- Santander UK
- Axis Bank UK
- Bank of Cyprus UK
- ICICI Bank UK
- State Bank of India UK
- Bank of China UK
- Turkish Bank (UK)
For the full list, take a look at the full list on the FCA site here [pdf].
At present, people who have accounts with banks licensed elsewhere in the European Economic Area (EEA) have some protection under a "passport" scheme. These include:
- Ikano Bank
- Triodos Bank
Should one of these banks go bust, we're reliant on the equivalent of the FSCS in our bank's home nation to get compensation, with a €100,000 limit on the protection available.
Government support for banks
Since the financial crisis of 2008, bank ownership has taken on a slightly different meaning.
What we often really mean when we ask about ownership now is how much of these banks the UK Government owns?
The Government manage bank assets through two bodies set up to protect the interest of UK taxpayers as shareholders and to promote a better banking system, meaning a more stable and competitive system.
The most well known is UK Financial Investments (UKFI) which owns shares in:
- Lloyds Banking Group: just under 6% in January 2017, down from 43% at the height of the crisis, and
- Royal Bank of Scotland: a 72% share which the Government referred to in January 2017 as a "long term asset".
UKFI also previously held Northern Rock, until most of the company was bought by Virgin Money in 2012.
Another Government holding company, UK Asset Resolution Limited (UKAR) took on the rest of the mortgages once sold by Northern Rock, as well as those of Bradford and Bingley and their subsidiary Mortgage Express.
In late 2015, UKAR completed the sale of the Northern Rock mortgages to private equity firm Cerberus, and at the time we're writing this update, the sale of the Bradford and Bingley mortgage book appears to be entering its final stages.