Northern Rock confirms 100% guarantee to go

Feb 24 2010 By Karen Dent, The Journal

NORTHERN Rock savers will no longer be protected by the Government's 100% guarantee from May this year.

The state-owned bank, which has been split in two before the more profitable part is sold off to the private sector, said the Government had decided its strong financial position meant the guarantee was no longer necessary.

It was put in place in September 2007 to the stop the run on the bank but will now be lifted on May 24. It means the Rock’s savers will have the same protection as other banks and building society customers, with the Government guaranteeing protection of up to £50,000 in savings per person under the Financial Services Compensation Scheme (FSCS). The 100% guarantee will remain in place for savers who took out fixed term accounts for the duration of the product.

Rock chief executive, Gary Hoffman, said: “This is another positive step in the right direction and the decision reflects our good progress and the strong capital position of Northern Rock.

“The company is returning to a level playing field and our savers will enjoy exactly the same level of protection, under FSCS, as customers of other UK banks and building societies.”

The bank said it had written to all of its saving customers about the changes.

:: Click here to read an interview with Northern Rock Chief Executive Gary Hoffman