David Prosser: A test for Northern Rock
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Outlook: The signal yesterday from the Government that it intends to drop its 100 per cent guarantee of savers' deposits with Northern Rock may well presage an exodus of account holders to other banks and building societies.
Rock has benefited from its government backing, introduced to stabilise the panic about its future in 2008, at the expense of rival savings providers where savers are protected only up to a maximum loss of £50,000 under the Financial Services Compensation Scheme.
However, if ministers are really serious about selling off the nationalised bank, this is a step that must be taken first. A privately owned Rock could not be extended the benefit of a state guarantee for its savers. And the bank must be given some time, before a sale, to stand on its own two feet in order to prove that it can be run as a standalone going concern.
The outflows will certainly be interesting. Ever since nationalisation, Rock's rivals have complained that the bank has an unfair competitive edge thanks to its Government backing. Now we'll find out exactly what the guarantee was worth – and if Northern Rock really is a brand that has any future in its own right. Selling the bank will be one thing, making it prosper again quite another.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments