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."
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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.More Articles by Building Societies Association (BSA) ...