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N. Rock's new bond - security issue??

I was in a N.R. branch yesterday and quite a few 'Silver Savers' were putting their hard-earned into this new fixed rate bond that gives a huge 6.9% return. Seems too good to be true as it doesnt even lock you in for a year. You only loose 90 days interest if you pull out early.

Would I be right in thinking that bond holders are just one step more secure than equity holders - in the even of liquidation?

NR's advertising implies it's just like a savings deposit account however when the bond account is opened they issue a certificate that carries the word "Investment " on it rather than deposit or savings.

Currently depositors have a 100% guarantee from HMG, but how do you reckon the bond holders are placed in the event of liquidation? Should it come with a wealth warning.

Your views are appreciated.

Reply to
JimBob
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I've been looking at this myself too. If you download the terms and conditions from their website, they say that there is no penalty for any number of withdrawals, and no notice has to be given, so it may be even better than you think.

Under the definitions section in the terms and conditions, it says "'Bond' or 'Account' means the Northern Rock's Deposit Account or Savings Account opened by us in your name...", which I take to mean that the 'Bond' is merely a savings vehicle, and is thus protected in just the same way up to £35000 per investor. If anyone thinks differently, I'd like to know too.

Reply to
Norman Wells

Yup, it's just a sav : With the Fixed Rate Access Bond you have no-notice, charge-free access to : your money and there are no limits to the number of withdrawals that can be : made. The minimum withdrawal amount is ??250. : : All withdrawals will be processed by post only. If you wish to make a : withdrawal for any amount from ??250 upwards, simply write to our Savings : Department.

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By the way, if you check the website the 6.9% bond was withdrawn yesterday - issue 2 is now 6.5%.

Theo

Reply to
Theo Markettos

£100,000 now.

Daytona

Reply to
Daytona

Is that just for savers with NR, or with other banks too? Pretty unfair if NR were getting preferential treatment, especially in light of the possibility of it ending up in public ownership, if only for a while.

Reply to
Ronald Raygun

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