Monday 17th September 2007
Northern Rock could cease to exist within the next 12 months, it has been claimed.
The Press Association reports that many financial experts anticipate the building society will not survive the current withdrawal crisis.
Hundreds of customers queued at branches around the country to drain their savings accounts, Agence France-Presse adds, with managers agreeing to extend their opening hours this week to allow accountholders to be dealt with.
The surge in withdrawals follows the news that the Bank of England had agreed to provide short-term financial assistance to Northern Rock to ensure it could cover its holdings in light of the sub-prime mortgage crisis in the US.
But the Financial Services Authority advised that its judgment on the building society is that it "is solvent, meets all capital requirements and has a good quality loan book".
Chief executive of Northern Rock Adam Applegarth issued a statement this weekend apologising to customers for the inconvenience caused by the news.
"Your money is safe with us and if you want some - or all of it - back, then you are perfectly entitled to it," he wrote on the company website.
"Whilst you may have to wait a little longer than usual to receive it, you will get it."
But Baronworth Investment Services notes that consumers should not leave their life savings in an account they are not comfortable with.
If Northern Rock were to become insolvent, the Financial Services Compensation Scheme would repay up to £31,700 of the first £33,000 held in savings accounts by customers, the investment firm states.
Meanwhile, a guaranteed income or growth bond could guarantee 90 per cent of all savings above £2,000 with no upper limit, the company adds.
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