FSCS protection when banks merge

FSCS protection is per banking licence, not per brand. While a bank you use is owned by another but keeps its own licence, you have £120,000 with each. When the business moves into the other bank's licence, the two limits become one £120,000 on the day of the transfer. There is no grace period of separate protection afterwards. What the rules give you instead is notice of at least a month and a three-month window to move the excess without penalty. Two transfers are due in 2027: The Co-operative Bank (with smile) into Coventry Building Society, and TSB into Santander UK.

Transfers that merge FSCS limits

BrandsMoving intoDateYour FSCS limit
The Co-operative Bank, smile Coventry Building Society 1 January 2027, if the High Court approves at the final hearing on 2 December 2026 Separate today (£120,000 at the Bank, including smile, and £120,000 at the Society). One shared limit from the transfer. Penalty-free withdrawals of the excess: 3 December 2026 to 2 March 2027.
TSB Santander UK Planned for the first half of 2027, subject to court sanction; no date or hearing published yet Separate today: Santander says protection "applies separately to each bank". Once TSB's business moves into Santander UK, the same rule means one shared limit; the banks have said they will tell customers in advance.
Virgin Money, Clydesdale Bank, Yorkshire Bank Nationwide Building Society Done: 2 April 2026 One shared limit since 2 April 2026. The penalty-free window ran from 24 February to 1 June 2026 and has closed.
M&S Bank HSBC UK Done: 1 June 2026 M&S Bank is now a division of HSBC UK Bank plc, so it shares one limit with HSBC UK, HSBC Private Bank and first direct.
Sainsbury's Bank savings NatWest Done: 1 May 2025 The savings are now NatWest deposits, so they count towards NatWest's limit.
Tesco Bank Barclays Bank UK Done: 1 November 2024 Tesco Bank savings are now held by Barclays Bank UK plc, so they count towards its limit.
Dates may still change; the Co-op dates depend on the court. For every brand and the licence it sits under, see which banks share a banking licence.

The rule: one month's notice, three months to move

The rule is in the PRA Rulebook, Depositor Protection 19.1. In a merger, transfer or similar operation the bank must tell depositors at least one month before it takes legal effect. If the change reduces your total FSCS cover, you get three months from that notice to withdraw or move the part of your deposits above £120,000, with interest earned, without any penalty.

That window matters for fixed-rate bonds, notice accounts and other accounts you could not normally empty early. Instant-access and current accounts can be moved at any time anyway. A cash ISA should go by ISA transfer to the new provider, not by withdrawal, to keep its tax-free status.

A common belief is that protection stays separate for six months after a merger. That is not a UK rule. The six months in the FSCS rules belongs to temporary high balances (up to £1.4 million after events such as a house sale), which is unrelated. Virgin Money's own FSCS booklet is explicit: the change took effect from the transfer date, 2 April 2026, and combined deposits with Virgin Money and Nationwide have been protected to £120,000 in total since then.

Co-operative Bank and smile customers with Coventry savings

Coventry Building Society bought The Co-operative Bank on 1 January 2025, but the Bank kept its own licence, so today you can hold £120,000 with the Bank (smile counts as the Bank) and another £120,000 with Coventry. The High Court let the transfer process begin on 18 August 2026. The final hearing is on 2 December 2026; anyone who wants to object should tell the Bank before 25 November 2026. If the court approves, the business moves to Coventry on 1 January 2027 and a single £120,000 covers deposits with the Bank, smile and the Society together. Coventry plans to keep The Co-operative Bank and smile as trading names, so the brands you see will not change.

If your combined balance across the three is above £120,000 and some of it is in limited-access, notice or fixed-term accounts with the Bank or the Society, you can withdraw the excess penalty-free for three months from the day after the court approves: 3 December 2026 to 2 March 2027 on the current timetable.

TSB and Santander customers

Santander UK completed its purchase of TSB on 30 April 2026. TSB is a separate licensed bank for now, so a customer of both has £120,000 at each. Santander intends to move TSB's business into Santander UK under a Part VII banking business transfer in the first half of 2027, which needs the court's approval. No hearing date or customer notice has been published yet. When it is, the same notice and three-month rule applies, and the two limits become one on the transfer date.

What to check if you are affected

Add up everything you hold across both brands and the new owner, including joint accounts (each holder's share counts) and ISAs. If the total is at or under £120,000, nothing changes for your protection. If it is over, move the excess to a separately licensed bank during the penalty-free window, checking the licence rather than the brand. The ranking by credit rating shows how the alternatives compare, and who owns which bank shows which brands already belong to the same group.

Frequently asked questions

What happens to my FSCS protection when two banks merge?

While each bank keeps its own licence you are protected up to £120,000 at each. When one bank's business transfers into the other's licence, your deposits with both are added together and protected up to £120,000 in total from the transfer date. The bank must give you at least one month's notice, and if your cover falls you get three months to move the excess without penalty.

Do Co-operative Bank and Coventry Building Society share an FSCS limit?

Not yet. They are separately licensed, so you can have £120,000 with the Co-operative Bank (including smile) and £120,000 with Coventry. If the High Court approves the transfer at the hearing on 2 December 2026, they will share one £120,000 limit from 1 January 2027.

Is smile covered separately from the Co-operative Bank?

No. smile is a trading name of The Co-operative Bank, so smile and Co-operative Bank deposits already share one £120,000 limit. After the planned transfer on 1 January 2027 that single limit will also include Coventry Building Society.

Do TSB and Santander share an FSCS limit?

Not at the moment. Santander owns TSB, but they are separately licensed banks, so each has its own £120,000 limit. Santander plans to move TSB's business into Santander UK in the first half of 2027, subject to court approval; after that they would share one limit.

Do Virgin Money and Nationwide share an FSCS limit?

Yes, since 2 April 2026, when Clydesdale Bank PLC's business (Virgin Money, Clydesdale Bank and Yorkshire Bank) transferred to Nationwide. Deposits across them are protected up to £120,000 in total.

Is there a six-month grace period after a bank merger?

No. UK rules give at least one month's notice before the transfer and a three-month window to withdraw the excess without penalty, but protection merges on the transfer date. The six-month period in the FSCS rules applies to temporary high balances, not mergers.

Can I move a fixed-rate bond early when my bank merges?

If the merger reduces your total FSCS cover, yes: the bank must let you withdraw or move the part above £120,000, with the interest earned, without penalty during the three months after it notifies you.

Sources

Checked 23 October 2026 against the PRA Rulebook and the banks' own customer documents. This is information, not financial advice.