Once a failed bank, N Rock's a big draw among depositors
Northern Rock, taken over by the government in February, turned away savers after cash flooded into the only UK bank to offer complete protection of deposits.
By Bloomberg |
LONDON: Northern Rock, taken over by the government in February, turned away savers after cash flooded into the only UK bank to offer complete protection of deposits. The state-owned bank���s decision will ensure its share of consumer deposits doesn���t exceed 1.5% of the UK retail savings market and that the company doesn���t take ���unfair advantage of government support,��� the bank said on Thursday in an e-mailed statement.
���Recent turbulence in financial markets has led to a sizeable inflow of retail deposits, particularly in recent days, and Northern Rock is therefore taking further action to moderate its product range and product pricing, to uphold its competitive commitments,��� the company said.
Northern Rock benefits from an unlimited state guarantee on deposits, while customers of other British banks have savings protected only up to ��35,000 ($62,000). Bradford & Bingley was partially nationalised on September 29 and the government brokered a takeover of HBOS by Lloyds TSB Group on September 17.
Northern Rock is withdrawing four products to new customers, including its fixed-rate access bond. The internet-based E-Saver product offered rates of 5.75% on deposits of up to ��250,000.
Competition for deposits has increased in the past year, as banks have become more dependent on consumers��� cash following the seizure of credit markets. British banks on Wednesday expressed concern about Ireland���s decision to offer unlimited guarantees to its bank deposit accounts. The EU is to study the plan, which was passed by the Irish parliament on Thursday.
���I believe there is a reasonably meaningful move of deposits from UK banks into Irish banks and Northern Rock,��� said Simon Willis, an analyst at NCB Stockbrokers.
The Bank of Ireland has said it has seen a steady increase in people contacting its call-centers, BBC reported. Britain���s Post Office, whose savings products are backed by the Bank of Ireland, has also reported a rise in the number of customers seeking to invest, BBC said.
���People are being completely irrational by fleeing in this way,��� Vince Cable, the British Liberal Democrat finance spokesman, told Irish state broadcaster RTE. Cable said 98% of of all UK deposit accounts are covered by existing protection.
���Recent turbulence in financial markets has led to a sizeable inflow of retail deposits, particularly in recent days, and Northern Rock is therefore taking further action to moderate its product range and product pricing, to uphold its competitive commitments,��� the company said.
Northern Rock benefits from an unlimited state guarantee on deposits, while customers of other British banks have savings protected only up to ��35,000 ($62,000). Bradford & Bingley was partially nationalised on September 29 and the government brokered a takeover of HBOS by Lloyds TSB Group on September 17.
Northern Rock is withdrawing four products to new customers, including its fixed-rate access bond. The internet-based E-Saver product offered rates of 5.75% on deposits of up to ��250,000.
Competition for deposits has increased in the past year, as banks have become more dependent on consumers��� cash following the seizure of credit markets. British banks on Wednesday expressed concern about Ireland���s decision to offer unlimited guarantees to its bank deposit accounts. The EU is to study the plan, which was passed by the Irish parliament on Thursday.
���I believe there is a reasonably meaningful move of deposits from UK banks into Irish banks and Northern Rock,��� said Simon Willis, an analyst at NCB Stockbrokers.
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The Bank of Ireland has said it has seen a steady increase in people contacting its call-centers, BBC reported. Britain���s Post Office, whose savings products are backed by the Bank of Ireland, has also reported a rise in the number of customers seeking to invest, BBC said.
���People are being completely irrational by fleeing in this way,��� Vince Cable, the British Liberal Democrat finance spokesman, told Irish state broadcaster RTE. Cable said 98% of of all UK deposit accounts are covered by existing protection.
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