Why is Abbey National ok?
Santander, the owner of Abbey, are a Spanish bank and, as such, have to comply with the Spanish finance regulations. Unlike UK and US banks, Spanish regulations are stricter about how the bank raises funds in order to lend to consumers. Much more of the money that Santander lends to its customers have to come from deposits (money that savers put into deposit accounts). Banks in the UK have been borrowing money from other lenders in order to provide loans to its customers. The credit crunch effectively meant that the amount of money being borrowed decreased and the cost of borrowing increased. Banks found that this inability to borrow seriously hampered their liquidity (the amount of cash they have). This has called into question there ability to operate on a day to day basis and has seen some banks nationalised (B&B, Northern Rock). Santander, however, are nowhere near as reliant on having to borrow in order to maintain its liquidity as most of the money it has borrowed to customers ha
