The Chancellor today announced that the Government guarantee for retail deposits in Northern Rock plc will be lifted three months from today. The guarantee for wholesale borrowings of Northern Rock plc, to the extent it relates to sums which are attributable to retail deposits made with Northern Rock (Guernsey) Limited, will also be lifted at the same time. Fixed-term deposits in existing accounts will be guaranteed to maturity. Today’s announcement follows the successful restructuring of the bank on 1 January and marks the next step in its return to independent, commercial status.

The Chancellor’s announcement gives three months’ notice that retail deposits will retain the guarantee until 24 May. Following release of the guarantee, Northern Rock customers will continue to have the first £50,000 of their total deposit protected by the Financial Services Compensation Scheme (FSCS), whether their deposit is fixed-term, non-fixed-term or a combination of both. This is the same level of protection that is provided for retail customers of all banks in the UK.

Today’s announcement does not affect the status of wholesale deposit guarantees for Northern Rock.

Further information is available on the firm’s website.

Northern Rock has restructured to create two separate companies – a new bank (Northern Rock plc) and a mortgage provider (Northern Rock Asset Management plc). Both firms are authorised and regulated by the FSA. Customers do not need to take any action and will receive a letter from Northern Rock during early January to confirm these arrangements. The retail deposit guarantee from the Government remains in place. You can find more information on the restructuring on their websites – see Related links.

Northern Rock was today granted State Aid approval from the European Commission. This means that Northern Rock can proceed with its plan for restructuring the bank. The retail deposit guarantee from the government remains in place and for Northern Rock customers it is business as usual. You can find more information on the restructuring on their website.

The Treasury, following consultation with the Bank of England and the FSA, has today announced that it will bring forward legislation that will enable Northern Rock Plc to be taken into a period of temporary public ownership.

The Treasury, on behalf of the Tripartite Authorities, announced that in addition to the arrangements previously announced to protect existing depositors of Northern Rock it is also putting in place arrangements that will cover new retail deposits made after 19 September, including those made from today. These will cover all retail deposits including future interest payments, movements of funds between accounts and term deposits for the remainder of the term.

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