Northern Rock allays fears

Whilst disputing the notion of a buy-out, the lender did however state: “The Board is aware of its fiduciary duty and is actively considering all strategic options in the interests of shareholders, customers and other stakeholders.”

Responding to the support given by both the Chancellor, Alistair Darling, and the Financial Services Authority (FSA), Northern Rock also said:

“The Chancellor’s statement makes it clear beyond any doubt that all savings in Northern Rock are safe and secure. Consequently anybody who is in a queue outside a branch, or who is trying to access an online account can be fully reassured that there is no cause for concern whatsoever.

“Any customer who paid a penalty to withdraw their funds from Northern Rock, due to concern over the current situation, will have the penalty refunded if they reinvest those funds in the same type of account with Northern Rock by 5 October 2007.”

Responding to the Government's inititive which has been introduced in light of recent developments, David Kuo, head of personal finance at, said:

“The HM Treasury's initiative should help stem the outflow of cash from Northern Rock that has not only created instability at the bank but has caused strains at other institutions too.

“The move will help reassure depositors, who have been needlessly distressed by senseless procrastination by the Government and the Bank of England. The authorities have badly misjudged the frame of mind of bank customers who are behaving in the only way they know how, namely to safeguard their assets.

“The Government now needs to quickly reassure customers at other banks by underwriting their deposits too. It must act swiftly to avert unnecessary aftershocks because bank customers need to be absolutely sure that money deposited at any bank is secure, not only at Northern Rock.

“If they don’t, then they are underestimating the mood of the public, who need immediate reassurance that the Bank of England will not only be a lender of last resort to troubled banks but also a guarantor of the first order to worried customers.”