Northern Rock savers to lose 100% guarantee

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The Treasury has today announced savers with Northern Rock will lose the Governmenta��s 100% guarantee on 24 May.

The move means the crisis-torn bank is back in line with its rivals but savers will still benefit from the A?50,000 guarantee to all savers under the Financial Services Compensation Scheme (FSCS).

The 100% guarantee was put in place after Northern Rock collapsed in the autumn of 2007 when savers staged a nationwide run on the bank. This signalled the onset of the banking crisis.

On 1st January, Northern Rock was split into two divisions – a a�?good banka�?a�?of profitable assets and a�?bad banka�? of toxic debts.

The Treasury said the bank is now strong enough for the guarantees to be removed.

Treasury Minister, Lord Myners, comments: “The Government’s actions to stabilise Northern Rock protected the savings of millions of families and the jobs of thousands of workers.

“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,” added Lord Myners.

Lord Myners continued: a�?Today’s announcement shows how far we have come. Depositors can have confidence in Northern Rock.a�?

Commenting on the decision, Fiona Cornes of the Building Societies Association (BSA), said: “It helps return the savings market to normality and we will be able to compete more fairly now with one of the nationalised banks.”

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