Other banks benefit from Northern Rock misery
October 20, 2007
Following the recent turmoil faced by Northern Rock, where worries savers took over two billion pounds worth of savings out of the bank amidst concerns of collapse following confirmation that the lender had borrowed money from the Bank of England, many others financial institutions and banks have benefited as savers look around for somewhere else to place their savings.
A stampeded of savers have been queuing at Northern Rock branches in order to take out their savings even though the bank and the government assured them that their money was safe.
The Bradford and Bingley has been identified as one of the companies that has greatly benefited from the misery of Northern Rock, with many former Northern Rock savers taking advantage of the savings account that offers a good rate of interest and no penalties for withdrawals. This comes despite the B&B being identified as a high risk by the Financial Services Authority according to reports, and despite share values dropping by 15% last week.
One industry official stated: ‘People have become more nervous and are looking for alternative accounts that really do offer good deals. Price has always been a concern with them but now we are beginning to see a noticeable interest in security as well.’
Another expert expressed concern that some savers may be rushing into finding an alternative account, stating: ‘There is a danger about getting too concerned with safety and putting all your savings with a bank like HSBC, which is not a great savings provider in terms of rates. You still want to get a good return on your money. If nothing happens to these banks or building societies, you are missing out on great returns. HSBC may not have borrowed a great deal of money, but it has penalties: if you withdraw money in any given month, you then lose that month’s interest. ‘
Alan Wright
20th October 2007
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