Is Northern Rock now a safe bet?
March 18, 2008
Over the past six months Northern Rock has dominated the financial headlines, having become the victim of the first run on a British bank in 150 years, been in talks over the sale of the company for many months, becoming a high profile victim of the global credit crunch, and finally passing into public ownership. When it was discovered that the Rock had taken an emergency loan from the government last year panic set in amongst customers of the bank who feared that Northern Rock was on the verge of collapse. As a result of this over £2 billion was withdrawn by savers in a matter of days, bringing the ailing bank to its knees.
However, the government recently announced that Northern Rock was to be nationalised, and following the passing of an emergency Bill the nationalisation of the bank was completed in record speed. The question that is now arising amongst consumers and industry professionals is whether Northern Rock is now a safe bet again when it comes to depositing savings. It seems that whilst some consumers seem to be reassured as a result of the nationalisation others are still licking their wounds from last year and are too worried to take another risk.
Northern Rock is certainly making an effort to try and get back on track, and is offering a range of tempting rates to try and entice customer back. In addition to being able to get some good rates on savings customers also have the reassurance that any savings up to £35,000 are guaranteed 100% by the government – a change that was brought in as a result of the Northern Rock crisis, before which the 100% guarantee only applied to the first £2000 worth of savings.
With its government backing Northern Rock now offers the same level of security as other government backed savings schemes, such as National Savings, and this is certain to appeal to some people, which could help the Rock to regain some of its business as well as its reputation.
However, there are many people that still need convincing, with one consumer stating: ‘The savings rates look good. But I won’t invest with Northern Rock. I’m mildly worried. It might be illogical but I’m still uncertain about Northern Rock. It could be that I don’t really trust the Government and Alistair Darling.’
Some industry experts are stating that if you have savings of up to £35,000 then you have nothing to lose by placing it with Northern Rock, and you can benefit from the competitive interest rates that the bank is now offering. However, many have added that any savings over and above the £35,000 guarantee threshold may be better placed in another high interest account with a different financial institution. There are a number of savings accounts offering high interest accounts, many of them foreign banks that have recently broken into the UK market, such as Kaupthing Edge, ICICI, and IceSave.
Recent additions:
- Are banks using sneaky tactics to make more money?
- Is it the end of the road for cheques?
- Increasing security when banking online
- Are packaged current accounts worth the money?
- Bank of England tries to balance concerns over rising inflation and slowing economy
Related Articles
- Temporary nationalisation for Northern Rock The government recently decided that Northern Rock will benefit from going into public ownership, at least on a short term basis, rather than being sold
- Savers may want to steer clear of Northern Rock Industry experts are warning that consumers that are thinking of transferring their savings to Northern Rock may want to consider the likelihood that interest rates
- Can the Rock win over consumer confidence? Since the crisis that surrounded Northern Rock last year, when it was discovered that the Rock had taken an emergency loan from the Bank of
- Increased consumer awareness over savings protection could have helped Northern Rock According to the Chairman of the UK's financial regulator, the Financial Services Authority. Northern Rock could have been saved from becoming the first victim of
- No Northern Rock share dividend payout Troubled high street lender, Northern Rock, has recently announced that it will not be paying out any share dividends to shareholders. The announcement follows the
Comments
Got something to say?