Brown confirms saver protection will be raised

LONDON (Reuters) - Prime Minister Gordon Brown confirmed on Tuesday that the government plans to raise the guarantee for bank savings to 50,000 pounds from 35,000 pounds in a new banking law.

Protection of bank deposits has become a key public concern after the government was forced to nationalise two mortgage lenders this year, Northern Rock and Bradford & Bingley.

In a consultation document released in July, the Treasury proposed increasing the compensation limit to 50,000 pounds, on a per person per bank basis.

Brown confirmed the increase would be included in banking reforms to be put to parliament soon.

"We're raising it to 50,000 pounds," he told BBC television in response to a question about savings guarantees.

"It's in the banking bill and it will go through very quickly and I hope it will go through with all-party support," he said.

Brown's government plans to introduce a banking bill when parliament resumes next week which will strengthen supervision and give regulators powers to step in when a bank is failing to seize its assets and save customers' deposits.

Banks had been worried that they might have to pay billions of pounds into the deposit protection scheme when balance sheets are under strain because of the credit crunch, but the government has assured banks they will not have to pay money upfront.

Ireland guaranteed all bank deposits on Tuesday in a bid to improve the industry's access to international funds frozen by the global credit crunch.