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Rock cuts accounts as savers flock to safe haven
Jonathan Prynn, Consumer Affairs Editor02.10.08
Northern Rock has been forced to axe more than half of its range of savings accounts after being swamped with demand for new accounts.
The Government-owned bank is seen as a "safe haven" in a world where others are failing because it is backed by the taxpayer.
Thousands of savers who took their money out of Bradford & Bingley, Halifax and other banks seen as less secure have gone to Northern Rock in recent days.
Under competition rules imposed when it was taken into public ownership, Northern Rock is not allowed a share of more than 1.5 per cent of the savings market.
The huge inflow of funds means that it is now getting dangerously close to this ceiling. Yesterday the Newcastle-based bank stopped accepting applications for its on-line savings account called E-Saver.
Earlier this week it withdrew its Fixed Rate Access Bond.
Today a further four products were taken off the market.
These were its Silver Savings, Silver Savings 30, Business Reserve and Fixed Rate Bonds deals.
It still offers five savings products but these will be kept under review.
A spokesman said: "As we said at our half year results, we have been growing our retail deposits. The inflow has increased in the last few weeks."
Reader views (1)
I find it amazing that our government who nationalised Northern Rock will not allow it to take more than 1.5% of the savings market when people desperately want to protect their savings, yet the Irish will protect their banks money without limits. What has it come to when Ireland are showing Gordon how it is done.
- Tom, Watford UK
