Northern Rock to scrap savers' 100 per cent guarantee

City A.M. Reporter
THE Government is to withdraw its 100 per cent guarantee to Northern Rock savers.

In three months time the guarantee – introduced to save the stricken lender – will be scrapped.

However, savers will still benefit from the £50,000 guarantee to all savers under the Financial Services Compensation Scheme (FSCS).

Financial Services Secretary Paul Myners said: “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.”

The collapse of the Northern Rock in the autumn of 2007 signalled the onset of the banking crisis.

The guarantee will be withdrawn on 24 May.

A Northern Rock spokesman said the move “reflects the good progress we have made and the strong capital position of the bank”.