DENMARK’s biggest banks have written to the European commission to complain about the behaviour of the newly nationalised Northern Rock in the savings market.

In the first formal attack on Northern Rock’s conduct lodged with European authorities, the Danish banks claim the publicly owned bank enjoys an “unfair competitive advantage”.

They also claim that the “extraordinary protection” afforded to Northern Rock’s customers from the British government could lead to a “distortion of competition” in the market.

The criticisms are set out in a three-page letter that was sent to Neelie Kroes, the European competition commissioner, earlier this month.

The Danish complaint comes as Ron Sandler, Northern Rock’s chairman, prepares to file the bank’s business plan with the commission.

The plan is expected to reveal that Northern Rock’s mortgage book could be shrunk to about half its current size.

Northern Rock’s 6,000-strong workforce is also expecting to hear news of job cuts. Sandler has been working on a number of proposals to reduce job losses on Tyneside, including plans that would see the workforce administer mortgages on behalf of other lenders through out-sourcing agreements.

Pressure is mounting on Sandler to publish full accounts for Northern Rock, which were withheld before nationalisation.

British bankers are increasingly concerned that Northern Rock’s government-backed status is allowing it to attract more than its fair share of the savings market. It is offering the highest rate in 11 of the 19 types of saving account monitored by the industry, according to banking sources.

A number of its products offer rates of 6.25%, a full 100 basis points higher than Bank rate.

The British Bankers’ Association is pushing for Northern Rock’s savings products to have regulated interest rates, tied to those offered by competitors.

The Building Societies Association (BSA) is considering lodging a complaint with the Office of Fair Trading over Northern Rock’s behaviour.

Adrian Coles, the director-general of the BSA, said: “We are watching the situation closely. Given that everyone is being encouraged to use savers’ money to fund their businesses through the current market conditions, this is concerning.”

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