Should I move my Northern Rock ISA ?

Macce

I currently have £28K in a fixed ISA @ 6% with Northern Rock due to mature in Apr 2008. I am getting increasingly worried about the current state of Northern Rock and what will happen if the bank falls into Administration.

Should I be thinking of moving my ISA to another provider? however by doing so I will lose £1600 in interest!

Please help !!

Macce

Ian_W

Your £28K is 100% guaranteed by the Financial Services Compensation Scheme [as is every deposit account up to £35K] and if you had more than that the government has has made it unlimited for Northern Rock for the forseeable future. On that basis losing £1600 seems extreme to ensure safety when, as far as anything ever can totally safe in life, you've got it already.

I could have understood your comments and worries more a few months ago but with Virgin's bid in, and others waiting in the wings, Administration seems far less likely now than it did then.

Macce

The last few days have been a bit confusing. As I understand it the 2 hedge funds that represent the NR shareholders are totally against Virgin. If they vote no to the takeover there is a real possibility that NR could go into administration.

Can someone tell me what this actually means for account holders if the bank does go into administration ? What impact will it have to a person's account ?

Ash

Ian_W

Macce wrote: »

The last few days have been a bit confusing. As I understand it the 2 hedge funds that represent the NR shareholders are totally against Virgin. If they vote no to the takeover there is a real possibility that NR could go into administration.

The hedge funds DON'T represent NR shareholders - they own their own shares in NR and stand to lose ALL their money if NR go into Administration. They have no protection if that happens so whilst they're against Virgin and want a better deal for shareholders [though mainly for themselves!] - Admin would be a much worse option than Virgin for them.

Can someone tell me what this actually means for account holders if the bank does go into administration ? What impact will it have to a person's account ?

I thought I already had?

Your £28K is 100% guaranteed by the Financial Services Compensation Scheme

See FSCS website HERE.
As a depositor your money is as safe in NR as in any other institution.
If you're a NR shareholder the safety of your investment is less clear cut.

roddydogs

New rates for Savers! over 60 6.49%

Macce

Thanks for making it clear!

Mace

Ian_W wrote: »

The hedge funds DON'T represent NR shareholders - they own their own shares in NR and stand to lose ALL their money if NR go into Administration. They have no protection if that happens so whilst they're against Virgin and want a better deal for shareholders [though mainly for themselves!] - Admin would be a much worse option than Virgin for them.

I thought I already had?

See FSCS website HERE.
As a depositor your money is as safe in NR as in any other institution.
If you're a NR shareholder the safety of your investment is less clear cut.

expounder

I am also a saver with Northern Rock and was also confused about the guarantee given to savers with a defaulting bank. On the Northern Rock site the increased guarantee is not mentioned, and shows only the £31,700 maximum and I was thinking moving £30.000 out which would have lost me £600. I did see an anouncement on TV by Alistair Darling but it was fleeting and I didn't quite catch the jist of it I have been searching other sites for info and came across this one which has put my mind at rest thanks.

expounder

I am also a saver with Northern Rock and was also confused about the guarantee given to savers with a defaulting bank. On the Northern Rock site the increased guarantee is not mentioned, and shows only the £31,700 maximum and I was thinking moving £30.000 out which would have lost me £600. I did see an anouncement on TV by Alistair Darling but it was fleeting and I didn't quite catch the jist of it I have been searching other sites for info and came across this one which has put my mind at rest thanks.

Ian_W

From TREASURY PRESS RELEASE:

I want to put the matter beyond doubt. In the current market circumstances, and because of the importance I place on maintaining a stable banking system and public confidence in it, I can announce today that following discussions with the Governor and the Chairman of the FSA, should it be necessary, we, with the Bank of England, would put in place arrangements that would guarantee all the existing deposits in Northern Rock during the current instability in the financial markets.

... and a furthwer press release HERE says:

HM Treasury today confirms that the guarantee arrangements for existing deposits in Northern Rock plc would cover all accounts existing at midnight on Wednesday 19 September. This guarantee covers future interest payments, movements of funds between existing accounts, and new deposits into existing accounts. The guarantee will also cover accounts re-opened in the future by those who closed them between Thursday 13 September and Wednesday 19 September, inclusive.

So £35K or less per depositor is covered 100% by FSCS - see link in earlier post - abover that is covered for NR only to an unlimited amount of savings.

Aegis

Ian_W wrote: »

From TREASURY PRESS RELEASE:
... and a furthwer press release HERE says:

So £32K or less is covered by FSCS - see link in earlier post - abover that is covered for NR only to an unlimited amount of savings.

Isn't it £35k or less now?

ollyk

I wonder how long it would take to claim this money? My bet is months and months!