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If N Rock go bust........................

Rob W

by Rob W
in Football

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Guest Gemmill

Guest Gemmill

Posted
Posted

The fact that the BoE have stumped up the emergency funding is actually a positive in a backward sort of way as it means they see the business model as workable, and the current problems as temporary - if the BoE thought there was any chance of NR going bust they wouldn't be handing billions over to them in emergency funding.  And don't be surprised if this prompts other banks to do the same - they're all suffering at the minute, not just Northern Rock.

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SAK

SAK

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Posted

We aint overly worried at PwC, and a lot of our clients where I work have Northern rock loans etc

 

If they do go bust another bank would buy up their assets (loans) so debtors would end up oweing the money to someone else. For savers they would be covered by the FSA's scheme for 100% of their first £2000 and 90% of the remaining £33,000. The ones to lose out would be ordinary shareholders.

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SAK

SAK

Posted
Posted

The fact that the BoE have stumped up the emergency funding is actually a positive in a backward sort of way as it means they see the business model as workable, and the current problems as temporary - if the BoE thought there was any chance of NR going bust they wouldn't be handing billions over to them in emergency funding.  And don't be surprised if this prompts other banks to do the same - they're all suffering at the minute, not just Northern Rock.

 

Barclays had to borrow £1.6 Billion just a couple of weeks back. They tried to explain it as a glitch with the clearing system but no ones buying that story http://uk.biz.yahoo.com/31082007/214/barclays-confirms-1-6bn-boe-emergency-loan.html. To go off topic slightly the global money markets are in turmoil due to reckless lending practices.

 

The main trigger at the moment is that the US housing market is crashing as loans which were given out to every Tom, Dick, and Harry are now being defaulted on. These mortgages were sliced up into packages ( called CDO's http://en.wikipedia.org/wiki/Collateralized_debt_obligation) and then sold onto investors (pension funds, hedge funds, other banks etc). Now these CDO's are practicly worthless and finacial instituations are holding bits of paper which were sold to them for 100's of billions.

 

The banks don't trust each other as they don't know who is solvent and have stopped lending to each other http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article2446026.ece. This has caused a liquidity crisis and forced the BOE to step in. The European Central bank and the FED have done the same by lending 10's of Billions. For institutions like Northern Rock they can no longer easily borrow money on the money markets. This will mean higher lending costs being passed on to borrowers. http://www.thisismoney.co.uk/mortgages/mortgages/article.html?in_article_id=424240&in_page_id=1

 

Edit: For spelling.

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madras

madras

Posted
Posted

Northern Rock Announce press conference for 11am.

can't have signed anyone,the transfer windows shut :coolsmiley:

 

Very good ;D :clap:

the withdrawls and deposits windows will be shut soon aswell.

 

 

 

am i trying to get too much from this ?

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Guest Phil K

Guest Phil K

Posted
Posted

thought they were the UK's biggest building society or something?

Bad management, corporate incompetence rather than the company itself it seems (rare that, isnt it ?  :rolleyes:)

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Colos Short and Curlies

Colos Short and Curlies

Posted
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apparently total panic has set in and people are withdrawing as much money out of NR as possible, thats not gona help matters at all!

 

Argghh I hate people.

 

This is what causes bank failures. The initial 'problem' was under control.

Everyone takes money out of NR, NR don't have the cash to repay them and have to call in their own loans from other banks, problems at other banks. People withdraw savings.

 

etc etc

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ToonTastic

ToonTastic

Posted
Posted

is it true that any personal savings under £13,000 are guaranteed by the government agencies.

 

ie if the rock does go under the small individual saver doesn't get his arse kicked ?

 

No the FSCS pays 100% of the first £2,000, then 90% of the next £33,000 - in other words the maximum payment is £31,700, if you have more spread it around banks then your covered.

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Dr. TC

Dr. TC

Posted
Posted

Our chairman is a billionaire.....who cares if they go bust :)

 

Well actually i do ive just took a Mortgage with them lol

 

I really don't get why people with Mortgages are worried. Surely they've given you the cash now. What's the worst that can happen? Are they allowed to ask for it back more quickly or change interest rates? I would have thought any change of terms would allow you to move your mortgage for free wouldn't it?

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Stu

Stu

Posted
Posted

:frantic:

    Sept. 14 (Bloomberg) -- Hundreds of Northern Rock Plc

customers crowded into branches in London today to pull out

their savings after the mortgage-loan provider sought emergency

funding from the Bank of England.

    ``It's scary,'' said Peter Pye, 60, a retired university

lecturer standing in a line of about 30 people outside the

Moorgate branch in the financial district. ``I have my life's

savings in Northern Rock.'' He said he would withdraw a ``six-

figure'' sum and leave 5,000 pounds in the account.

    The Bank of England said it will provide emergency cash to

Northern Rock, Britain's third-largest mortgage provider, in

the nation's biggest bailout of a financial institution in 30

years. The rising cost of credit left the lender unable to make

new loans and stoked concern among customers about their money.

    Northern Rock, which has 1.4 million retail depositors and

800,000 mortgage customers, hasn't imposed any special limits

on withdrawals, spokesman Don Hunter said. The Newcastle,

England-based company, which traces its roots back to 1850, had

to restart its Internet banking site ``over a period of time''

today after unusually high usage froze the service, he said.

    ``It is understandable that customers are concerned,''

Hunter said. ``Their mortgages and savings are safe.''

    Northern Rock has 76 bank branches, according to Hunter.

By 11 a.m., dozens of people formed queues on the sidewalk

outside the Moorgate office, the Maddox Street branch in the

West End shopping district, and the Kingston Upon Thames outlet

in southwest London.

 

                            `No Risk'

 

    ``There is no risk,'' said James Hamilton, an analyst at

Numis Securities in London. ``The Bank of England said Northern

Rock is solvent.'' Hamilton said that ``as credit turmoil will

return to normal, Northern Rock's business will as well.''

    ``Why leave your money in a bank that obviously has some

major problems?'' said Michael Ribotham, 74. ``I'm not young

and don't have a chance to make it back again.'' Ribotham had

been waiting at Moorgate for about 40 minutes.

 

    Northern Rock was formed from a merger between two

building societies and the initial public offering of Northern

Rock Building Society in October 1997. The stock plunged as

much as 29 percent today. The lender said profit will trail

analysts' forecasts, blaming a ``severe liquidity squeeze'' and

rising short-term interest rates.

    ``I am going to take out the lot, every penny,'' said

William Gough, 75, queuing with about 30 people outside the

Maddox Street branch. Gough, from Belfast, in Northern Ireland,

was ``horrified'' to hear about Northern Rock's request for

emergency funding.

 

                        `On The Safe Side'

 

    Hunter, the bank's spokesman, was unable to say how many

customers were demanding to reduce or empty their accounts.

    ``I'm worried,'' said Jenny Western, 33, a photographer

from London. ``I am taking all my money out. Maybe everyone is

overreacting but I want to be on the safe side.''

    The bailout will ``help Northern Rock to fund its

operations during the current period of turbulence in financial

markets,'' the Bank of England, U.K. Treasury and Financial

Services Authority said in a joint statement.

    ``I don't think anything is going to happen because the

Bank of England won't allow it to happen,'' said Paul Delamere,

46, waiting at Maddox Street to withdraw his money. Still, he

was ``more comfortable'' with reducing his account.

 

 

Bloody Londoners :frantic:

 

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