Let us look first upon the long-term credit ratings of the UK largest banks, plus those for the most prominent building society – Nationwide BS, and Santander bank, which acquired Bradford & Bingley, Abbey and Alliance & Leicester:
The largest UK banks rating
|LDR rate||CDS rate||Quality of service|
|HSBC||AA- (Very strong)||78%||0.84%||51%|
|Nationwide BS||A+ (Strong)||111%||1.59%||no data|
|Santander||AA (Very strong)||132%||2.68%||64%|
Sources: Companies websites, IHS Market data, companies news, CMA data
Santander and HSBC are global banks, so probably your company money is a little bit safer there than in the UK-only banks.
Upon looking at loan-to-deposit ratio metrics (LDR), HSBC (78%) looks safer than Lloyds (148%) or Santander (132%).
IHS Markit 5-year data allows assessing banks according to their CDS rate. Credit Default Swap is an insurance policy, so the higher the CDS premium, the higher the potential risk of default. CDS of the UK largest banks put HSBC in the best position of the lowest risk of default.
It comes out that HSBC is the safest bank in the UK. But is it the best bank for business in terms of quality of service and customers trust?
Last year massive survey of business customers from 14 British banks, conducted by BVA BDRC for the Competition and Markets Authority, revealed exciting data. Researchers asked people with a business bank account how likely they are to recommend their financial provider. “The Big Six” arranged very differently by people’s opinion. Customers favour Santander more than HSBC, but Handelsbanken received the most sympathy.
The best online and mobile banking experience provides Metro Bank, Santander, Barclays, and Lloyds. HSBC is in sixth place. Customers are keener to recommend Handelsbanken and Metro Bank for quality of relationship and account management than any bank from “the Big Four” list. The same picture revealed from the analysis of quality of service in local branches. Among the most significant establishments, Lloyds is more often preferable locally, but Handelsbanken and Metro Bank look better than Lloyds in this relation.
Although the analysis of offers put Santander at the top as the best bank for startups since it offers free and discounted banking for startups and two business bank accounts, it is not the only one on this list.
If you are a new business, look at what Yorkshire Bank offers: 25 months of fee-free banking. To be eligible, you need to be a new business opening an account within 12 months of starting up, or a small business with a turnover of less than £2M switching your main business bank account to Yorkshire Bank.
For a startup, Barclays has an excellent offer of a generous 12-months fee-free business account. Plus, you get access to a competent board that offers support to grow your business.
FSCS covers every account in any UK bank with a safety net. Limited companies concerned about the safety of cash held on deposit in their business bank account are covered by the same protections under the Financial Services Compensation Scheme (FSCS) that protects cash bank deposits held by individual savers. A limited company would receive compensation for deposits held up to a limit of £85,000.
Unlike in previous years, umbrella company contractors may also be eligible for the same protections.
Oracle Capital Group specialists assist with setting up bank accounts and make a customized selection to suit your requirements. We can help your startup to move to the UK and open a business bank account.