Northern Rock just minutes away from the mark
Article source: www.mortgagebrokers4london.co.uk
One of the very bold targets that Northern Rock had set ever since its nationalisation was attracting £18 billion in savings and deposits. This huge allowance, in actual fact, equates to 1.5% of total savings and deposits held by British banks; and is actually the maximum that Northern Rock can hold, as it is in Government hands. In fact it is estimated that the Northern Rock bank is just days away from achieving its bold target; Northern Rock has already been successful in attracting savings and deposits worth over £17.5 billion since nationalisation, and therefore in real terms remains only half a billion pounds away from its target.
However, the finger of blame is being pointed directly at the Northern Rock bank which was nationalised in January of this year; many believe that the Rock is being anti-competitive, and using its newly acquired “special status” of being a government run financial institution to pull in large numbers of increasingly risk averse and cautious clientele.
Northern Rock’s unique status allows it to offer a guarantee on one hundred percent of the deposits and savings its holds since it is fully owned by the UK taxpayers; in comparison to other financial institutions which are only able to offer guarantees on £35,000 worth of savings and deposits per person, as per the current legislation. What's more, troubled institutions such as the Halifax Banks of Scotland (HBOS) group and the Bradford & Bingley Bank (B&B), amongst others, have seen their previously loyal savings customers flocking to the Northern Rock due to the one hundred percent guarantee on savings and deposits being offered. This is also because the majority of savers want a cast iron assurance that their savings will be protected during this period of previously unforeseen economic uncertainty.
Consequentially, other financial institutions, banks, building societies and even the European regulators are belligerent that Northern Rock has an inequitable advantage due to its so called “special status”. They claim that it is not possible for other banks and buildings societies, which is clearly true; to compete with the financial security and certainty that Northern Rock can offer to its savings and deposits customers.
Currently, Northern Rock is tactfully shrinking its’ mortgage book by offering largely unappealing interest rates and advising the mortgage brokers to find solace for their business with another mortgage lender.
It is predicted that Northern Rock will deploy the same strategies once again, as it is getting close to attaining its goals in the relations to the £18 billion allowance for its savings and deposits business; it will therefore have no other option but to also subsequently make its savings and deposit accounts less attractive to new customers. Whilst less attractive rates of interest will detract some customers, many will still move their capital to Northern Rock because safety is their primary consideration at this time.
About Northern Rock
Northern Rock is a well established banking institution which started out life as building society. The Rock, as it is sometimes referred to, became a Public Limited Company in October 1997. It offers a wide range of retail banking, investment products and mortgage products throughout the UK. Northern Rock was taken into temporary public ownership in February 2008.
About the Savings Guarantee
The UK savings guarantee, also referred to as the Financial Services Compensation Scheme protects each protects the savings and deposits of each UK bank customer up to a total value of £35,000 per institution they hold their money with.
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