TURMOIL in Britain’s banking industry sparked an unprecedented level of account switching last week, with comparison sites reporting three times the normal level of activity.

Bradford & Bingley (B&B), the former building society that had grown to become Britain’s biggest buy-to-let lender, was taken into public ownership on Monday, and its savings business was sold off to Santander, the Spanish owner of Abbey and, soon, Alliance & Leicester (A&L).

Savers with accounts at B&B and Abbey (including online bank Cahoot) are only protected up to £35,000 (rising to £50,000 from Tuesday) across both brands. A&L will maintain its own banking licence, however, with a separate limit.

Meanwhile, Icelandic bank Landsbanki, which owns Icesave in Britain, was down-graded by ratings agency Fitch after the country’s second-largest bank, Glitnir, was in effect nationalised. Icesave has taken up to £5 billion of savers’ cash since its launch in October 2005, but the number of customers pulling out above the limit is now expected to accelerate.

Anglo Irish Bank, which has a UK business covered by the Irish government’s 100% guarantee, said it had seen double the usual number of applications from savers, many of them from Icelandic banks.

We ask where your money is safe – and if it is possible to get a decent rate and security.

100% SECURITY

Irish banks

The Dublin government’s guarantee applies to six institutions: Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life & Permanent, Irish Nationwide building society and the Educational building society – until September 2010. Four have operations in the UK and said the guarantee will apply to all UK depositors.

The biggest in terms of retail deposits is Bank of Ireland, which runs the UK Post Office’s personal financial services and has 1.5m customers here. Anglo Irish, which tops the best-buy tables in this country, has about 100,000 customers. Allied Irish offers mostly business banking, while Irish Nationwide has only one branch here.

Anglo Irish appears unbeatable if you want security and a good rate – it has an easy-access account paying 6.4% on just £1, guaranteed to at least equal Bank rate until January 1, 2011. This is one of the top five easy-access accounts according to data provider Moneyfacts; the best, from West Bromwich, is at 6.56% on £1,000. It also has a one-year fixed bond at 7.05% on £500, against a top rate of 7.21% from the AA.

However, analysts warned against going in for the guarantee. “The Irish government has given Ireland’s biggest banks an unfair advantage, which is directly contrary to the European rules on state aid,” said Anthony Woolich at business law firm LG.

There are also doubts over its rates. Kevin Mountford of comparison site Moneysupermarket said: “No doubt the bank will be tempted to boost its margins by cutting the rate.”

Not all of the Post Office’s products are covered by the Irish guarantee – its child trust funds are offered by Family Investments, not Bank of Ireland.

Of those that are covered, its cash Isa pays 6.25% on just £1, including a 1.5% bonus, and it is guaranteed to track Bank rate until January 2010. This compares favourably with the top cash Isa rate of 6.5% from Manchester building society – this is fixed for a year and also includes a bonus.

National Savings & Investments

You don’t have to move your money across the Irish Sea to get a 100% government guarantee. NS&I products are backed by the UK government, but at a lower rate. Its easy-access account pays from 1.85% on balances between £100 and £999, to 4.4% if you have more than £50,000.

Its index-linked savings certificates might be worth a look if you think the cost of living is set to go higher. They pay the retail prices index (now 5%) plus 1% tax free – or 6%. A higher-rate taxpayer would have to earn 10% to get the same return.

Northern Rock

The bank, which is underpinned by a 100% guarantee, was forced to pull its best deals last week so it did not breach the terms of its nationalisation in Februrary under which it can take only 1.5% of UK retail deposits.

It withdrew its easy access Esaver account, which had been paying 6%, and its one-year fixed rate bond, also at 6%. It still offers a competitive fixed-rate cash Isa at 6%, however.

THE SUPERBANKS

Lloyds-HBOS

Savers were rattled last week by fears the merger to create a giant with 40m account-holders and a 28% share of the mortgage market would have to be renegotiated after a slump in the value of Halifax Bank of Scotland’s shares. However, Gordon Brown, the prime minister, insisted the deal would go ahead and shares rallied.

Lloyds TSB has the highest rating of any British bank at AA+, according to Fitch. This indicates very high credit quality, though there is a chance this will be down-graded as a result of the HBOS deal.

Halifax owns Bank of Scotland, Saga, Birmingham Midshires, the AA and Intelligent Finance, so if you have savings with one of these as well as Halifax, they will all count towards your £50,000. It is unclear whether Lloyds will maintain a separate banking licence and a separate limit.

Abbey-A&L-B&B

Santander is one of the largest banking groups in the world with 70m customers and more branches globally than any other international bank. It has been relatively unscathed by the global financial crisis – so far – and retains an AA credit rating. It will now become one of the biggest players in the UK, with about 11% of the savings market and 25m customers.

Analysts said it was probably worth staying put – within the £50,000 limit if you’re still worried – if you are getting a decent rate. The best accounts from the three brands are relatively similar – Bradford & Bingley has an internet saver account at 6.6%, A&L’s Esaver pays 6.6% and Abbey’s ESaver Direct pays 6.5%. The latter have catches, though. Abbey’s rate includes a bonus of 0.75% if no withdrawals are made; otherwise you receive just 2.75%. With A&L’s deal, no withdrawals are permitted.

The best of the rest

Barclays, HSBC and NatWest, owned by Royal Bank of Scotland, all have AA ratings from Fitch. Nonetheless, shares in RBS and Barclays have been hit by fears about their reliance on the wholesale money markets. Again, therefore, the advice is to make sure you have no more than the compensation limit in your account. HSBC, seen as the strongest of the three, has an online bonus saver account at 5.25%.

Nationwide, which has the best rating of any building society at AA-,has a one-year fixed-rate bond at 6.5%.

FOREIGN BANKS

Ratings agencies raised concerns last week over the Icelandic banks because of their reliance on wholesale funding and fears over the Icelandic economy.

Icesave is only partly regulated by the UK’s Financial Services Authority; the Icelandic authorities are ultimately responsible for compensation. Under their scheme, the first €20,887 (£16,360) of deposits is guaranteed. The rest of any claim would be made up by the UK’s Financial Services Compensation Scheme.

The position is the same for Dutch bank ING, considered one of Europe’s strongest. It pays 6.5% to new customers.