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Dear Tim, I see that banks like Citigroup are now performing better. Therefore, I was wondering if it was safe to leave our money in their hands again. –Reg Reg, the banks, particularly the larger international ones that have benefitted from federal bailouts or similar direct government intervention appear to be performing better. Since you refer to Citigroup, indeed they benefitted from a $25 billion (Dh92bn) emergency bailout windfall to keep them on the straight and narrow. Certainly, American President Barack Obama could have been gauging his glimmer of hope comments on the fact that the banks seems to be responding well to the stimulus. And this bodes well as he enters his second 100 days of office.

That said, I was in the United States recently and read an article on the phenomenal growth in sales for safes and similar secure receptacles. Even the US mint has a promotional coin collection, which comes with a Fort Knox style safe delivered to your door – while stocks last of course! So perhaps the confidence is still left wanting in the US in certain circles and if everyone were to keep hold of their money then this is not going to help the liquidity issues. So, if there is no lending taking place then this will stymie growth and the spiral will go on and on. Notwithstanding share prices, perhaps another barometer that the banks are doing better is their ability at present to put monies to one side to pay bonuses. The “bonus” word conjures up such dreadful connotations nowadays but Wall Street believes that if you want to retain or attract good human capital then this system will prevail. We would like to think that it will be somewhat more policed in future to avoid any future CEO embarrassments we have seen recently.

Let’s face it, governments can ill afford to have a bank go under and unlike other companies, which have fallen victim to the downturn (such as Woolworths, for example), we need banks. Banking is a utility like water and electricity – it is a necessity unlike some of the companies, which are no longer trading. Reg, leaving your money in a safe, under the mattress or in the biscuit tin is neither helpful to you or the economy so go to a bank that ticks all your confidence boxes and become an account holder again with business 24

Which bank though? I cannot give that answer. However, you might want to consider various domiciles for your accounts and the investor protection legislation that prevails. The investor protection or rather deposit protection schemes vary greatly and by spreading your monies you can mitigate your risk if you really feel that nervous; typically the wealthy do just that. Be wary of account providers that offer the highest rates of interest particularly if there is no minimum term requirement. Keep to names you know and in traditional banking centres that can hopefully alleviate you of your banking jitters.