Opinion Former Article

BSA welcomes removal of Northern Rock's 100% savings guarantee

Commenting on the announcement today that Northern Rock will in three months have its 100% guarantee on savings removed, Adrian Coles, BSA Director-General, said:

"The removal of Northern Rock's guarantee is welcome as a significant step towards returning the cash savings market to a level playing field.

"The BSA has actively lobbied for the removal of Northern Rock's 100% savings guarantee as societies are fast becoming the only providers of financial services not to be directly subsidised or supported by the state. Banks, NS&I and the Post Office all have significant public sector support. The guarantee has enabled Northern Rock to attract substantial inflows following the bank's nationalisation.

"The Government should also consider setting a negative, or at the very least zero, financing target for NS&I in 2010/11 to avoid further distortions from NS&I. We also call on the Treasury to ensure that the part-nationalised banks - Lloyds and RBS - do not operate in a way that distorts the savings market through their Government ownership.

"In the longer term, we believe there is a strong case for returning Northern Rock to the mutual sector, thus encouraging diversity, competition and a more prudent approach to business than might otherwise be achieved."

~ Ends ~


Fiona Cornes

020 7520 5926


Notes to editors

The Building Societies Association (BSA) represents mutual lenders and deposit takers in the UK including all 52 UK building societies. Mutual lenders and deposit takers have total assets of over £390 billion and, together with their subsidiaries, hold residential mortgages of almost £260 billion, 21% of the total outstanding in the UK. They hold over £250 billion of retail deposits, accounting for just under 23% of all such deposits in the UK. They employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches.

Photographs of Adrian Coles are available from the BSA press office, or from the Association's website at www.bsa.org.uk or Headlinemoney www.headlinemoney.co.uk

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