Subscribe to The Money StopNews Feed

Browse > Home / News, News-Banking / Impact on Northern Rock could have been softened

Impact on Northern Rock could have been softened

September 1, 2008 by admin  
Filed under News, News-Banking

1 Comment

In a recent report the chairman of the Financial Services Authority, Callum McCarthy, has stated that the impact on stricken lender Northern Rock could have been softened had consumers been made more aware of the savings guarantee that was in place from the government. Mr McCarthy stated that many consumers had not been aware of the savings guarantee that was in place, and had they been more aware of this it could have made a big difference to the level of trouble that Northern Rock found itself in.

Mr McCarthy stated:  “If there is greater understanding of the position of individual depositors, if they know they’re 100% covered up to a certain amount, if they know they’re going to get very rapid repayment, it is much less likely that there will be a retail run.” During the time that the crisis occurred the first £2000 of savers’ money was guaranteed by 100%, with a further 90% guarantee on the next £33,000 worth of savings. This has since been increased to a 100% guarantee on the first £35,000 of savings, and there are still talks on extending this guarantee to the first £100,000 of savings.

Northern Rock became the victim of the first run on a British bank in a century and a half last year after it became public knowledge that the bank had taken an emergency loan from the Bank of England. Once this became widely known  many of the bank’s 1.5 million savers quickly withdrew their savings amidst worries that the bank was on the verge of collapse, over two billion pounds was withdrawn from the Rock in the space of a few days.

Recent Addition:

Tags: bank charges, half, money, bank of england, government, fsa, nose, flock

Tags:

Related Entries

  • Buying better than renting in some areas but not all
    • Over recent months first time buyers have experienced huge difficulties when it comes to getting a mortgage to purchase a property, with the global credit crunch resulting in far tighter credit conditions, and with lenders
  • Your 100% savings guarantee could cover the first £50,000
    • Until late last year the government operated a savings guarantee of 100% on only the first couple of thousand pounds of a savers' money deposited in a bank or savings account. However, the crisis surrounding
  • Northern Rock forced to cut savings accounts
    • Just a year ago Northern Rock was being branded the victim of the first run on a British bank in almost 150 years, and customers were flocking to get to the bank and take out
  • MP claimed consumers were wealthier than ever
    • Most consumers are now feeling the pinch to put it mildly with household budgets stretched to their limits due to rising living costs, soaring petrol prices, increased food costs, and high borrowing costs. Yet, according
  • Supermarket giants try to entice customers back
    • With food prices having soared out of control, in addition to the range of other hikes in bills and living costs, many people have been struggling to make ends meet when it comes to the
  • Northern Rock causes saver caution
    • Savers are being far more cautious with the money that they put into savings following the recent credit squeeze and subsequent Northern Rock scare, price comparison site Peopleschampion.com has revealed.Conducting polls of people standing in
  • Widow fined £800 by Northern Rock
    • A woman who previously had tens of thousands of pounds worth of savings with ailing bank Northern Rock was outraged when she was hit with an £800 fine from the bank for withdrawing her savings,
  • Another drop in Northern Rock shares
    • Following the turmoil and chaos that took hold in September of this year, high street lender Northern Rock has seen its share prices plummet yet again, this time falling to their lowest level yet. According

Comments

One Response to “Impact on Northern Rock could have been softened”

Trackbacks

Check out what others are saying about this post...
  1. Your 100% savings guarantee could cover the first £50,000 says:
    September 1, 2008 at 2:48 pm

    [...] Impact on Northern Rock could have been softened [...]



Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!