Banks seek Northern Rock spoils

The private banking divisions of the main UK clearing banks are competing to attract high net worth depositors exiting from beleaguered Northern Rock, the UKs fifth-largest mortgage lender which was saved by a last-minute government rescue this month.The bank, which has offered among the highest savings rates available in the UK, has attracted individual deposits ranging as high as £20 million ($40 million).As a result of the UK governments rescue plan, all existing Northern Rock deposits qualify for what is in effect a state guarantee This should provide the big UK clearing banks HSBC, Barclays, Lloyds TSB and Royal Bank of Scotland with opportunities to offer alternative savings accounts as well as related investments through their private banking divisions, as withdrawal cheques clear through the banking system.Chancellor of the Exchequer Alistair Darling has hinted at a wide-ranging overhaul of the banking deposit guarantee scheme, insuring accounts worth up to £100,000, in the wake of the Northern Rock crisis.The outflows at Northern Rock represented the first major run on a bank in the UK for more than 100 years.The bank still remains in crisis and a number of other banks have declined to acquire it, although it is felt to have little future as an independent entity