An important milestone has been reached in Northern Rock's return to independent, commercial strength with notice just having been given for the end of the special guarantee for the bank's retail deposits.

 The Treasury has announced that the guarantee for retail deposits in Northern Rock plc will be lifted three months from today on close of business, 24 May. Fixed term deposits in existing accounts will be guaranteed to maturity.  Today's announcement follows the successful restructuring of the bank on 1 January.

"The Government's actions to stabilise Northern Rock protected the savings of millions of families and the jobs of thousands of workers," said the Financial Services Secretary to the Treasury, Paul Myners (PICTURED). "The guarantee of retail deposits was a vital step that restored confidence in Northern Rock's operations when its customers were worried about its soundness. Over the last two years, we have worked to get the bank back to financial health.  We have taken a number of important steps, most recently to divide the bank into a retail business that will be sold back to the private sector in due course, and an asset management company that will remain in Government ownership.  Our goal is to see the taxpayer get a good return on its investment in the bank and for Northern Rock to focus on providing an excellent service to its customers."

After the guarantee is lifted every Northern Rock retail customer will continue to have the first £50,000 of their total deposit protected by the Financial Services Compensation Scheme (FSCS), whether their deposit is fixed-term, non-fixed term or a combination of both. This is the same level of protection that is provided for retail customers of all banks and building societies in the UK.  The guarantee applying to Northern Rock's retail deposits was put in place as a temporary measure during a period of unprecedented instability in the financial markets. It was never intended to be permanent.  The Government had undertaken to give at least three months notice before lifting the guarantee as it has today. Throughout the financial crisis, not a single retail depositor with a UK bank has lost any of their savings. Today's announcement does not affect the status of wholesale deposit guarantees for Northern Rock.

Commenting on the news, Gary Hoffman, Chief Executive welcomed the Government's decision to release the savings guarantee. "The guarantee remains in place until 24 May 2010 for customers with variable rate accounts, and fixed rate accounts are guaranteed until the end of the term, whatever that may be - possibly one, two, or more years," said Hoffman.