100 per cent Northern Rock savings guarantee to expire in May
100 per cent Northern Rock savings guarantee to expire in May
Thursday 25th February 2010
The government's 100 per cent guarantee on saving deposits held at the taxpayer-owned Northern Rock will expire on May 24th, it has been announced.Savers will still be protected up to £50,000 under the guarantee offered from the Financial Services Compensation Scheme (FSCS).
The government's 100 per cent guarantee was introduced in September 2007 after the first run on a UK bank in a generation was witnessed when the Rock said it was seeking emergency help from the Bank of England.
Financial services secretary Lord Myners said the removal of the 100 per cent guarantee was an important step towards the bank being privatised and follows criticisms it enjoyed an unfair advantage.
"The government's actions to stabilise Northern Rock protected the savings of millions of families and the jobs of thousands of workers," Lord Myners said.
"The guarantee of retail deposits was a vital step that restored confidence in Northern Rock's operations when its customers were worried about its soundness."
Northern Rock's downfall, only averted by it being nationalised, signalled the onset of the banking crisis in the UK and served as the canary in the mine for the global slowdown.
Saving accounts at the Rock are currently held in the company called Northern Rock PLC, the 'good bank' formed when the entire operation was reorganised and halved in the new year.
Northern Rock Asset Management, the 'bad bank', holds most of Northern Rock's old mortgages, meanwhile.
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