Irish savers with nationalized British bank Northern Rock will soon lose their 100% deposit guarantee. An announcement from Northern Rock about the lifting of the unlimited guarantee is expected in the coming weeks.
Northern Rock will provide three months' notice to customers before removing the guarantee. Irish savers can then expect their deposits to be covered up to a value of £50,000 by the UK Treasury.
Staff at Northern Rock's Irish headquarters were unable to provide the exact date that the changes would be announced but did confirm that the lifting of the guarantee would take place shortly.
Northern Rock, which has attracted Irish customers with strong savings rates, has cut the interest rate on their popular Demand Online account to 2.5% this month.
Savers with qualified Irish Financial Institutions currently have unlimited protection for their deposits until September 2010 when the guarantee is expected to be reduced to €100,000.
Northern Rock could expect to lose some Irish deposits as savers seek higher interest rates and a higher guarantee but Northern Rock is now seen as a stable institution with high levels of liquidity.
Northern Rock was nationalized by the UK government in February 2008. The lifting of the unlimited deposit guarantee is a step in preparation for the sale of the bank. Potential buyers will need to see how the bank performs without government protection.