http://www.moneyweek.com/file/41437/credit-default-swaps-how-to-spot-the-riskiest-banks.html

A good article, but with a number of things that I don't agree with. The main argument in the article is that you can compare what the bank has to pay for loans in the market (risk free + CDS spread) compared to what it pays its savers. However, this is not comparing apples with apples

• The CDS spread takes into account recovery rate - typically 40% for senior debt and 20% for subordinated. Taking HBOS which the article states has a 5 year senior spread of 70bps. One could argue why not use the subordinated spread of 130 bps, as if the banks defaults, savers will come in below even the subordinated debt holders.
• Why is the 5 year rate being used - the banks typically only lock you in for one year

http://www.alliance-leicester.co.uk/savings/index.asp?page=esaver&ct=savingshome

Alliance and Leicester 1 year subordinated is currently 310bps

Northern Rock does have a CDS spread - 5Y senior is approx. 250bps