National Savings & Investments Reports Record Outflow

The latest statement of National Savings & Investments, the U.K. savings bank owned by the government, suggests that British savers have become more confident in the banking sector, which fact is proven by net outflow seen in the 1st quarter of 2009. Let us remind that the so-called “flight to safety” began in September 2009 as a result of the collapse of Lehman Brothers Holdings Inc. The bank’s statement also revealed that the end of the “flight to safety” resulted in a more challenging operating environment for National Savings & Investments. According to National Savings & Investments’ e-mail statement, the 3 months to the 30th of June saw gross outflows, which amounted to as much as £4.5 billion – the figure is £1.3 billion higher than that of inflows than its inflows. It also revealed that bank’s inflows to March 31st amounted to £9.9 billion, which is almost 4 times more than 2007-2008 inflows. Mr. Simon Willis, NCB Group banking analyst, says that despite the fact that the news sounds positive for British banks, which have long been competing for deposits, it is quite gloomy for National Savings & Investments. Let us remind that National Savings & Investments inflows skyrocketed to the highest level in 4 years as a result of consumers’ desire to preserve their savings, which were put under risk after the failure of HBOS Plc, Royal Bank of Scotland Group Plc and Bradford & Bingley Plc, all of which were nationalized or bailed out last year. British savers preferred to turn to the government-owned National Savings & Investments, which guaranteed the full balance, whereas commercial banks only covered the first £50,000. Mrs. Jane Platt, Chief Executive Officer at National Savings & Investment said that the credit crunch resulted in a significant increase for the bank’s products even though it has cancelled its discretionary marketing policy.

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