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Northern Rock savers reassured by the Chancellor

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by Kay Mitchell

Customers of Northern Rock have been urged to stay calm after thousands have been queuing outside branches across the country to withdraw their cash. A statement from the British Bankers’ Association (BBA) said that Northern Rock is a safe and secure bank and savers and mortgage customers have absolutely nothing to worry about.

Northern Rock approached the Bank of England for emergency funding and around £2 billion has since been withdrawn by savers. However, Alistair Darling, Chancellor of the Exchequer, has reassured Northern Rock customers by promising to guarantee all current deposits.

The Chancellor was asked what would happen in the worst-case scenario of the bank being broken up and he replied that people do not need to worry, whatever happens they can get their money out of the bank.

The Chancellor pledged the support of the Government and the Bank England and he is reported to have said that he wants to put the matter beyond doubt because of the importance of maintaining a stable banking system and public confidence in it.

Savers of Northern Rock queued overnight to withdraw their money and the bank’s online facility is experiencing problems due to the high level of volume.

Northern Rock’s shares dropped by 35% yesterday – a similar fall to Friday of last week. It seems unlikely that the bank will be taken over following the damage to its reputation.

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News posted: September 18, 2007

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