British Govt to cut Northern Rock savings guarantee

The 100% guarantee on savers’ deposits held within Northern Rock is to removed within weeks as the British Government steps up plans to return the nationalised bank to the private sector, it was reported today.

It is understood the Treasury is planning to give three months’ notice before taking away the cast-iron guarantee, introduced by the Chancellor on all Northern Rock deposits in 2007 to halt the run on the bank.

Once removed, customers will revert to the same level of protection offered to all UK savers where the first £50,000 is insured by the Government, although it is thought those who took out individual savings accounts and longer-term bond products since September 2007 will retain the 100% guarantee.

The move is seen as another major milestone in the sale of Northern Rock, following its split in two on January 1, when it spun off a savings and mortgage bank called Northern Rock plc – effectively the “good” part of the bank which will be sold off into the private sector.