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Will Northern Rock savers jump ship?

As we mentioned earlier today, the UK government's 100% guarantee on deposits held with Northern Rock will be lifted on the 24th of May as the "good bank" is positioned for sale to the private sector. The lifting of the 100% guarantee has been welcomed by banks and building societies in the UK who had complained that Northern Rock was in a stronger position than the rest of the sector, which had to make do with the £50,000 Financial Services Compensation Scheme maximum guarantee.

However, there is now concern that potential buyers of the Northern Rock business will wait until after the 24 May to see how many savers jump ship once the 100% guarantee has been lifted. This will be an interesting exercise and should show whether UK savers have forgiven the bank for the problems of the past. If a number of savers decide to jump ship and look elsewhere, purely and simply because of the 100% guarantee being lifted, this could reduce the asking price for the business when the government finally sells it.

While Northern Rock is now in a better position than it was 12 months ago this will be an interesting test to see if consumers have forgiven the bank for the troubles of the past.

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