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Northern Rock sale won’t affect compensation

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by Jan Harris
Northern Rock sale won’t halve compensation

Savers with money in both Northern Rock and Virgin Money will not be disadvantaged by Virgin’s takeover of the Newcastle-based bank if either of the banks collapses.

Both Virgin Money and Northern Rock will keep separate banking licences following the £747 million deal, which is expected to be rubber-stamped in January.

This means that the Financial Services Compensation Scheme (FSCS) will cover each bank separately and customers will be able to claim the full amount of compensation on their accounts in each bank in the event of difficulties.

The news should reassure savers who were concerned that the takeover could result in their compensation limits being halved, although the two licences could be merged at some stage in the future.

The FSCS covers deposits of up to £85,000 in single accounts and £170,000 in joint accounts.

Mark Neale, chief executive of the FSCS, said: “Those with large amounts of cash should remember to always try to keep within the £85,000 FSCS deposit limit, or £170,000 for joint accounts, per banking licence to protect their money.

“Anyone with savings above those limits should consider spreading their money around to ensure it is safe.”

Northern Rock will eventually operate under the Virgin Money brand and the combined entity will have four million customers, placing it in competition with Britain’s ‘big five’ of Santander, HSBC, Barclays, RBS and Lloyds and hopefully leading to better rates on the high street.

At the moment, Northern Rock tends to offer better rates on its savings accounts than Virgin Money, so savers would be wise to keep an eye on developments following the merger.

Sir David Clementi, the former deputy governor of the Bank of England, will become chairman of the combined bank, while Virgin Money’s Jayne-Anne Gadhia will retain her role as CEO.

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News posted: November 18, 2011

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1 Comment

  1. “The buyout of Northern Rock by Virgin Money will involve the integration of an enormous amount of highly important and personal data that must be managed effectively. Today the financial services industry is ever-more heavily regulated and so Virgin Money will have to comply with the strictest of processes when dealing with the changeover. Key information needs to be extracted in a timely fashion so using a commercial open source BI platform will enable the organisation to facilitate this process without incurring fines or complaints by clients.

    Implementing flexible business intelligence to provide a complete perspective of the new systems and providing management with the ability to not only identify where the immediate benefits are coming from, but also which areas need to be addressed, is key. This business disruption presents both challenges and opportunities, but by using tailored, flexible business intelligence reporting, Virgin Money will be able to establish which systems are flexible enough to cope with the large amounts of data anticipated. No doubt this deal presents serious assimilation challenges, but with the right approach, it also brings a range of opportunities and will help the business achieve the positive results it requires.”

    Comment by Tom Cahill, Vice President EMEA, Jaspersoft — November 18, 2011 @ 3:44 pm

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