UK Govt Withdraws Northern Rock Guarantees

by Robert Lee, Tax-News.com, London

10 August 2010

A further milestone in Northern Rock plc’s return to independence has been reached, with the notice that HM Treasury’s guarantee arrangements in place for the bank’s wholesale liabilities will end in three months' time.

Following their introduction in September 2007, retail deposit guarantees were allowed to expire on May 24, 2010, but the guarantees for wholesale deposits and wholesale borrowings of Northern Rock plc, which remain in place, are to be lifted at the close of business on November 2, 2010.

This announcement brings forward the end date of wholesale guarantees that, as previously stated, would not extend beyond December 31, 2010. The current beneficiaries under these wholesale guarantees are Northern Rock (Guernsey) and the Northern Rock Foundation, which both have funds on deposit with Northern Rock plc. Fixed term wholesale liabilities in existence at January 1, 2010, continue to be guaranteed until maturity. The announcement does not affect the wholesale guarantee arrangements in place for Northern Rock (Asset Management) plc.

The government said the decision had been made following recommendations from UK Financial Investments (UKFI), and following approval by the Financial Services Authority and the Bank of England.

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