N Rock accused of savings grab

By George Parker and Jane Croft in London and Robert Anderson in Stockholm

Published: March 16 2008 19:52 | Last updated: March 16 2008 19:52

Northern Rock has been accused of abusing its government guarantee to grab savings business from other banks, a practice officials say will be stamped on by authorities in Brussels.

The bank, which last month became the first UK mortgage lender to be nationalised in more than 25 years, topped 11 out of 19 categories of savings products earlier this month in a best buy table, a British banker said, with several accounts paying 6.25 per cent, well above the Bank of England base rate.

Alistair Darling, UK chancellor of the exchequer, will on Monday present an outline business plan to Ms Kroes. Her officials say she will demand that the Rock shrinks its business to reduce the distorting effects on competition, triggering potentially heavy job losses.

Ms Kroes is also expected to demand assurances from the Treasury that Northern Rock will end its aggressive offers to savers, following concerns among British banks and complaints from rivals in Denmark, where the UK bank has a small operation.

“The Danish Bankers’ Association is concerned that the competition is no longer on equal market conditions,â€