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Northern Rock deposit guarantee see set to expire

This evening we saw the UK government's guarantee on Northern Rock deposits expire as of 5 PM with customers transferring back to the Financial Services Compensation Scheme which will protect deposits up to £50,000. Customers who have taken on fixed rate long-term investments will see their funding guaranteed until expiry as long as the arrangement was put in place before 24 February 2010.

So far there have been few comments regarding any flurry of activity from Northern Rock savers although when you bear in mind that the company has been split by the UK government is there really any greater risk associated with the bank?

It is unclear as to the financial strength of Northern Rock at this moment in time because the company has undergone a major restructuring over the last 12 months. The government is looking to spin off both the "bad bank" on the "good bank" operations of Northern Rock although there has been little progress on this front in recent weeks. Whether or not we will see the new UK government issue a short term update to the markets about the future of Northern Rock remains to be seen but there is no doubt that it is not one of the "favoured banks" of UK savers.

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