Northern Rock plc deposits

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.

Since it would otherwise be unfair to other banks and building societies, the arrangements would not cover any new accounts set up after 19 September, other than re-opened accounts as set out above.

In the case of wholesale market funding for Northern Rock plc, the Treasury confirmed that the arrangements would cover:

existing and renewed wholesale deposits; and
existing and renewed wholesale borrowing which is not collateralised.

The arrangements would not cover other debt instruments including:

covered bonds;
securities issued under the “Granite” securitisation programme; and
subordinated and other hybrid capital instruments.

The guarantee in relation to Northern Rock plc will remain in place during the current instability in the financial markets.

Notes to editors

1.These details were first announced at 7am today on the RNS.

2. Media enquiries should be addressed to the Treasury Press Office on 020 7270 5238.

3. Non-media enquiries should be addressed to the Treasury Correspondence and Enquiry Unit on 020 7270 4558, or by e-mail to public.enquiries@hm-treasury.gov.uk

4. This press release and other Treasury publications and information are available on the Treasury website at www.hm-treasury.gov.uk. If you would like Treasury press releases to be sent to you automatically by e-mail you can subscribe to this service from the press release site on the website.