Musings on the Northern Rock unlimited guarantee

Fella

I've been thinking about the Governments 100% guarantee on all existing and new deposits at Northern Rock. I don't see how this can continue indefinitely: For a start the Govt won't want to do so & perhaps more pertinently, at some point the other banks are going to realise they are no longer competing on a level playing field & will (IMO) undoubtedly get it changed.

So IMO the questions are:

Will the guarantee end?
If so when?
If so, will it end for all customers or just new deposits?

The reason I think this is relevant is this: The temptation for many must be to pile unlimited dough into the new 6.90% bond. However, that could turn into a risky strategy, if the Government removes the 100% guarantee at some point in the future (i.e. when Branston or whoever get their hands on NRK, which would be the obvious time).

Thoughts?


cheers
Fella

merlinthehappypig

Not sure, personally.

I'm certainly considering transfering the bulk of my capital to the new bond.

I'm not so much worried by the risk of losing any of it, but the possibility that access to it might be difficult in the event of any major problem.

For that reason I suspect that I will leave a working sum in another bank just in case.

knights

Fella wrote: »

at some point the other banks are going to realise they are no longer competing on a level playing field & will (IMO) undoubtedly get it changed.

Agreed

Fella wrote: »

So IMO the questions are:

Will the guarantee end?
If so when?
If so, will it end for all customers or just new deposits?

I think the guarantee will have to end for reason as above, no idea when. I think ultimately it will end for everyone to bring the organisation in step with others.

Fella wrote: »

The reason I think this is relevant is this: The temptation for many must be to pile unlimited dough into the new 6.90% bond. However, that could turn into a risky strategy, if the Government removes the 100% guarantee at some point in the future (i.e. when Branston or whoever get their hands on NRK, which would be the obvious time).

Of course it is easy access and whilst you can never say never I don't see a run on NR in the foreseeable future, certainly not before the fixed rate ends anyway. I hope I will not have to eat my words!

regards

Sooboo

I spoke with NR today and they told me that if the government withdraw their guarantee they will give customers 3 months notice before doing so. Does anyone know if this is correct?
I like the sounds of 6.9% on their fixed rate bond but I'm still a bit scared!!

bristolleedsfan

Sooboo wrote: »

I spoke with NR today and they told me that if the government withdraw their guarantee they will give customers 3 months notice before doing so. Does anyone know if this is correct?
I like the sounds of 6.9% on their fixed rate bond but I'm still a bit scared!!

Yip the government have said they would give 3 months notice before withdrawing the savers guarantee.

Fella ( for reasons known to himself) seems to be posting negatives on all the NR threads today. :rolleyes:

Other organisations have already said they not happy with NR getting "aided" as they may well be faced with competing with a resurgent NR which is y europe may throw out the bonds thing or insist on NR not competing in certain areas.

Heres a NR Newsfeed Fella, u can pick up old articles on here as well such as the 3 month notice guarantee the Government gave in the event that it was gonna withdraw its depositors guarantee.

http://www.newsnow.co.uk/newsfeed/?name=Northern+Rock

Fella

bristolleedsfan wrote: »

Yip the government have said they would give 3 months notice before withdrawing the savers guarantee.

Fella ( for reasons known to himself) seems to be posting negatives on all the NR threads today. :rolleyes:

No hidden agenda. In fact I didn't think this was a negative post, it wasn't intended to be? Just thinking out loud really.

cheers
Fella

Sooboo

bristolleedsfan wrote: »

Yip the government have said they would give 3 months notice before withdrawing the savers guarantee.

Fella ( for reasons known to himself) seems to be posting negatives on all the NR threads today. :rolleyes:

Other organisations have already said they not happy with NR getting "aided" as they may well be faced with competing with a resurgent NR which is y europe may throw out the bonds thing or insist on NR not competing in certain areas.

Heres a NR Newsfeed Fella, u can pick up old articles on here as well such as the 3 month notice guarantee the Government gave in the event that it was gonna withdraw its depositors guarantee.

http://www.newsnow.co.uk/newsfeed/?name=Northern+Rock

I have read your reply with interest, thank you. Reading betweeen the lines I get the impression you think it's an ok bet?

bristolleedsfan

Fella wrote: »

No hidden agenda. In fact I didn't think this was a negative post, it wasn't intended to be? Just thinking out loud really.

cheers
Fella

trouble is postings of thoughts outloud is liable to make others feel nervous about putting funds in NR when their is no apparent reason for doing so. ( feeling nervous)

heres an article containing the "3 months notice guarantee" so a lot of your thoughts have actually been answered officially.


http://www.taxresearch.org.uk/Blog/2007/12/18/northern-rock-the-treasury-caves-in/

Fella

bristolleedsfan wrote: »

trouble is postings of thoughts outloud is liable to make others feel nervous about putting funds in NR when their is no apparent reason for doing so. ( feeling nervous)

heres an article containing the "3 months notice guarantee" so a lot of your thoughts have actually been answered officially.


http://www.taxresearch.org.uk/Blog/2007/12/18/northern-rock-the-treasury-caves-in/

Surely that's precisely the benefit of this kind of thread though? Anyone who did have concerns can now rest easy in full possession of the facts?

bristolleedsfan

Fella wrote: »

Surely that's precisely the benefit of this kind of thread though? Anyone who did have concerns can now rest easy in full possession of the facts?

I previously posted about the 3 month guarantee at the time it was given ( december) idea of forum is people search to see if topic has been covered before posting a new thread.

bristolleedsfan

Sooboo wrote: »

I have read your reply with interest, thank you. Reading betweeen the lines I get the impression you think it's an ok bet?

NR is widely considered to be as safe. ( or safer) than any other deposit organisation.

Should be remembered that even if it was Nationalised, NR would still be operating albeit with a Government preferred people in the hotseats.