Britain says will lift Northern Rock savers' guarantee

The British government said Wednesday that it will lift a state guarantee for all savings deposits held at the nationalised Northern Rock bank, which came close to collapse three years ago.

"The Treasury has announced that the guarantees for retail deposits in Northern Rock plc will be lifted three months from February 24 on close of business, 24 May," the government announced in a statement.

After this date, customers will receive the same level of protection which is offered to all British savers in case a bank fails, under the Financial Services Compensation Scheme.

The Treasury added that the news was "an important milestone... in Northern Rock's return to independent, commercial strength".

The government currently insures the first 50,000 pounds (57,045 euros, 77,170 dollars) of savings held by every saver in Britain. The guarantee applies to each financial institution where a customer has savings.

Northern Rock was taken into public ownership in early 2008 after it ran into severe funding problems because of the credit crunch.

The troubled group was plunged into crisis in mid-September 2007 when it was forced to seek emergency help from the Bank of England.

That sparked the first rush in a British bank in living memory, as customers withdrew cash en masse.

To avert meltdown, the government agreed in December 2007 to guarantee all customer deposits held at the struggling group.

"The government's actions to stabilise Northern Rock protected the savings of millions of families and the jobs of thousands of workers," added Britain's financial services minister Paul Myners on Wednesday.

AFP