Foreign Perspectives

Much as Martin Lewis generally has good ideas on his website and puts them across well in interviews, I think that he’s totally wrong on the Northern Rock issue.

His basic premise is that people shouldn’t try to withdraw all their savings from Northern Rock simply because it is only going to cause them problems and besides the bank will probably be taken over by a somewhat more secure one by the end of the week.

Well, no, I don’t believe that is right. The queues outside Northern Rock send a very clear signal to other banking outfits that people will vote with their feet and that in itself is a very important signal.

What’s equally important is that this episode has highlighted the importance of selecting a solid financial institution for your savings and continuing to check that it remains solid. However, seeing as not so long ago Northern Rock was praised as being one of the best run mortgage banks around, it also highlights that you shouldn’t keep all your money in one place unless that one place is genuinely completely secure (and bear in mind that the only place that fits this bill is National Savings). That being the case, clearly it’s perhaps not the best idea to move directly from Northern Rock to ICICI (an Indian bank heavily promoted in the UK for very high interest rates on savings).

Chances are that the bank will be taken over by the end of the week, but I don’t think it’s a wise move to rely on chance when your savings are involved. So, keep queuing and get your money out until the bank is under new ownership.

Much as Martin Lewis generally has good ideas on his website and puts them across well in interviews, I think that he’s totally wrong on the Northern Rock issue.

His basic premise is that people shouldn’t try to withdraw all their savings from Northern Rock simply because it is only going to cause them problems and besides the bank will probably be taken over by a somewhat more secure one by the end of the week.

Well, no, I don’t believe that is right. The queues outside Northern Rock send a very clear signal to other banking outfits that people will vote with their feet and that in itself is a very important signal.

What’s equally important is that this episode has highlighted the importance of selecting a solid financial institution for your savings and continuing to check that it remains solid. However, seeing as not so long ago Northern Rock was praised as being one of the best run mortgage banks around, it also highlights that you shouldn’t keep all your money in one place unless that one place is genuinely completely secure (and bear in mind that the only place that fits this bill is National Savings). That being the case, clearly it’s perhaps not the best idea to move directly from Northern Rock to ICICI (an Indian bank heavily promoted in the UK for very high interest rates on savings).

Chances are that the bank will be taken over by the end of the week, but I don’t think it’s a wise move to rely on chance when your savings are involved. So, keep queuing and get your money out until the bank is under new ownership.