The Bank of England has stepped in to provide an emergency loan to UK mortgage lender Northern Rock after it ran into difficulties raising money on the wholesale financial markets.
A spokesman for Northern Rock told RTÉ News that Irish consumers can rest assured that their money is safe.
And the Financial Regulator has pointed out Irish consumers' savings are covered by the UK deposit protection scheme (www.fscs.org.uk).
Northern Rock customers with concerns are advised to contact the bank's consumer helpline on 1850 315 115. The helpline is open from 8am-8pm Monday-Friday, 8pm-4pm on Saturday and 10am-pm on Sunday. They can also consult the Regulator's website www.itsyourmoney.ie.
The Northern Rock spokesman said there had been an increase in activity on the bank's website and this had caused it to slow down.
But he said there were no additional restrictions on withdrawals beyond any restrictions which usually apply.
The BoE and Britain's Financial Services Authority said this morning they judged that Northern Rock was solvent, exceeded its regulatory capital requirement and had a good quality loan book.
Northern Rock has been the hardest hit UK lender as it relies on wholesale markets far more than competitors for its funding requirements.
It is the fifth biggest mortgage lender in Britain and has around 25,000 internet and telephone account holders in the Republic who between them have around €2.4 billion on deposit.
Northern Rock gets about three-quarters of its funding from wholesale markets and a quarter from retail deposits, whereas rivals such as HBOS get about half their funds from retail deposits.
Interbank lending costs rose to their highest level for nine years this week as banks scaled back lending to each other.
'The decision to provide a liquidity support facility to Northern Rock reflects the difficulties that it has had in accessing longer term funding and the mortgage securitisation market, on which Northern Rock is particularly reliant,' the government said in a statement this morning written in conjunction with the Bank of England and Financial Services Authority (FSA).
Speaking to BBC radio, the UK chancellor, Alistar Darling, said Northern Rock was the only institution to have called for funding from the central bank and Britain's economy and banking system remained strong.
And Northern Rock CEO Adam Applegarth stressed that Northern Rock remains solvent and said customers should be 'very greatly reassured' that the business is now backed by Bank of England funds.
'If I was a depositor, I'd think this was probably the safest place to invest,' he said.
Northern Rock said in a separate statement that a decision to rein back lending and the higher cost of funding would hit profits this year and next.
It said it now expected an underlying 2007 pre-tax profit of £500 to £540m ($1.1 billion), compared with analysts' current consensus forecast of £647 million.
It also expected a 'consequential impact' on 2008 profit.
Northern Rock is the first UK bank to get an injection of emergency support since the Bank of England in 1998 revised the rules under which it would act as a lender of last resort to banks.
The BoE said today that a similar facility is available to any other institution facing short-term difficulties.
The Bank of England, which has come under fire from some financial institutions for its hands-off response to market turmoil, said earlier this week it would only provide support to institutions facing short-term liquidity problems, and would not bail out insolvent companies.
Its shares closed down 31% at 491 pence on the FTSE100 in London.
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