'New Rock' fears on fund closure

18-01-2008

'New Rock' fears on fund closure
Fears of another investments run similar to that seen at Northern Rock have arisen with a reported withdrawal suspension at Scottish Equitable.

The property fund, run by insurance firm Aegon, is said to have temporarily prevented 129,000 small investors from accessing their money.

According to the Guardian, the investors have been told they will not be able to access money in the £2 billion property fund for as long as 12 months.

The newspaper reports the company's "buffer fund" of cash has been reduced from between ten per cent and 15 per cent to just one per cent.

The latest decision to shut a fund comes after Friends Provident did the same with its £1.2 billion portfolio last year.

It is also reported that Scottish Widows, another of Britain's biggest insurers, is considering a similar move.

All finance firms are reconsidering their positions in the wake of the global credit crunch following the collapse of the subprime market in the US.

In September, Newcastle-based bank Northern Rock was forced to ask the Bank of England for additional finances – leading to the first run on a British bank in living memory.

No one from Aegon UK was immediately available for comment.

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