Progress for key regional employer

Mar 2 2010 By Sarah Green, The Journal

LAST Wednesday, the Government announced that it will lift the 100% guarantee on Northern Rock variable rate savings accounts in three months’ time. This represents real progress for one of the region’s key employers.

As a customer it means that from May 24, up to £50,000 will be guaranteed by the Financial Services Compensation Scheme, the same as other UK banks and building societies.

If you have an existing fixed-rate bond, this will retain the full guarantee for the life of the product – for up to one, two or more years.

This is a clear sign that, after a period of uncertainty and much hard work, Northern Rock is recovering and slowly gearing itself for an eventual return to private ownership.

Chief executive Gary Hoffman said: "The Government’s decision to release the guarantee is a reflection of our good progress, stability and healthy capital position. This is very good news and another positive step in the right direction for Northern Rock."

For many in the North East, the Northern Rock crisis of 2007 highlighted the beginning of the recession as it quickly became clear that the problems at the bank were not simply a failure in one institution but that our bank represented the first casualty in a wider financial services crisis.

The journey for many businesses since 2007 has been tough.

However North East people are loyal and look to tackle adversity head on. Last week’s announcement relating to Northern Rock should be seen as symbolic as it represents the end of special treatment and Northern Rock returning to competitive parity to others in the industry.

Since it successfully completed its legal and capital restructure on January 1, 2010, Northern Rock plc now boasts one of the strongest capital ratios in the banking world. With its strong funding position, it can continue to provide a safe and secure home for savings while fulfilling it lending objectives.

The North East needs successful, well-run businesses and it is good to see a resurgent Northern Rock attracting skilled people from outside the region to supplement the talents of its local staff. The bank needs to remain in the region, employ local staff with local branches and keep a branding which is easily recognisable and one that its customers can be proud of. Last week’s announcement is another step forward for Northern Rock and should be welcomed.

:: Sarah Green is regional director of CBI North East