main UK clearing banks are competing to attract high net worth
depositors exiting from beleaguered Northern Rock, the UK’s
fifth-largest mortgage lender which was saved by a last-minute
government rescue this month.
The bank, which has offered among the highest savings rates
available in the UK, has attracted individual deposits ranging as
high as £20 million ($40 million).
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As a result of the UK government’s rescue plan, all existing
Northern Rock deposits qualify for what is in effect a state
guarantee. But many wealthier investors are believed to be playing
safe by withdrawing their money. This should provide the big UK
clearing banks – HSBC, Barclays, Lloyds TSB and Royal Bank of
Scotland – with opportunities to offer alternative savings accounts
as well as related investments through their private banking
divisions, as withdrawal cheques clear through the banking
system.
Chancellor of the Exchequer Alistair Darling has hinted at a
wide-ranging overhaul of the banking deposit guarantee scheme,
insuring accounts worth up to £100,000, in the wake of the Northern
Rock crisis.
The outflows at Northern Rock represented the first major run on a
bank in the UK for more than 100 years.
The bank still remains in crisis and a number of other banks have
declined to acquire it, although it is felt to have little future
as an independent entity.
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