On September 17th, the UK Government said that it would put in place arrangements that would guarantee all the existing deposits in Northern Rock during the current instability in the financial markets. On September 20th the UK Government confirmed that the guarantee would cover all accounts existing at midnight on Wednesday 19th September, as well as future interest payments, movements of funds between existing accounts, and new deposits into existing accounts. It would also cover accounts reopened by those who had closed them between September 13th and 19th. The UK Government also extended its guarantee to cover existing and renewed wholesale deposits and existing and renewed wholesale borrowing which is not collateralised. On 21 September the UK Government clarified that renewals of existing uncollateralized deposits and wholesale borrowing and retail bonds (in each case up to the same maturity) would be covered for the term of the renewal. The guarantee provides further comfort with regard to the Prime-1 rating. The guarantee from the UK Government was provided in an attempt to restore calm to retail depositors and to stop the significant outflow of retail deposits that Northern Rock was facing in that period. This outflow has significantly reduced the deposit base of Northern Rock weakening its already challenged liquidity position and we believe that the bank is unlikely to be able to generate significant deposit inflows in the future.

In short there are no guarantees on new accounts!