View Full Version : Northern Rock customers queue for cash as crisis hits high street. (Bank Run?)

09-14-2007, 03:37 PM
By Emma Thelwell
Last Updated: 7:26pm BST 14/09/2007

The credit crisis spilled onto Britain's high streets today as worried Northern Rock customers queued up to withdraw their savings.
Shares in Northern Rock plunge on BoE loan (http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/14/bcnnorth214.xml)
Analysis: More like Harare than Hartlepool (http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/09/14/nrock214.xml) | Q&A (http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/09/14/nrock114.xml)
Have your say on the crisis (http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/14/bcnnorth114.xml#form) | Read comments (http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/14/bcnnorth114.xml#comments)|10 tips to help you (http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/14/bcnrocktips114.xml)
Their fears were prompted by the revelation this morning that Britain's fifth-biggest mortgage lender had to ask the Bank of England for emergency financial assistance.
Ian Cowie: Northern Rock may face pressure to tighten rules (http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/14/bcnnorthcowie114.xml)
Philip Aldrick: Northern Rock customers should not panic (http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/14/cnrock314.xml)
Listen to Tony Looch and other Northern Rock customers in the queue (http://javascript%3Cb%3E%3C/b%3E:newWindow%28%27http://www.mediaplayer.telegraph.co.uk/?item=5DA34A94-137D-472D-9829-77C8D9215162%27,%27tcuk_mediaplayer%27,%27width=75 0,height=600,scrollbars=no%27%29)
http://www.telegraph.co.uk/money/graphics/2007/09/14/bcnnorth414.jpgTony Looch: 'I'm taking the lot out'Despite Northern Rock's assurances that there was no need for customers to panic, queues continued to build steadily at the London branches visited by the Daily Telegraph today.
For 65-year old Tony Looch, with savings of 135,000, the lender's calming words were not enough.
"I'm prepared to wait as long as it takes. I'm taking the lot out, if they'll let me have it," said Mr Looch, who was queuing outside the bank's Moorgate branch, in the heart of the Square Mile.
"I'm absolutely appalled that they should be so badly run and so badly regulated. I thought they were totally reliable and secure - they're supposed to be regulated these companies."
Northern Rock shares plunged 31pc by the end of the day as the lender slashed its profit forecasts and admitted it was seeking help from the central bank.
Based in Newcastle, Northern Rock has 76 branches around the UK, has about 1.4m savers, around 800,000 mortgage customers and retail deposits of 24bn.
Earlier in the day, Adam Applegarth, the company's chief executive, sought to calm the nerves of customers and shareholders alike: "In these extreme times we are pleased to have a high quality asset based and remain confident in the excellence of our strong customer franchise, our efficient business platform and our well-known brand."
However, the words appeared to carry little weight with the more than 200 people lining up outside Northern Rock's branch in Kingston, Surrey.
One pensioner, who did not want to be named, told The Daily Telegraph: "I am 65 and my husband is 72. We are queuing because we have substantial amounts of money invested in Individual Savings Accounts with Northern Rock.
"They say don't panic but it will be too late if things go wrong. I know that you need to keep level headed about these things, be we are not youngsters who can afford to lose this money."
Vasily Smirnov, a financial planning advisor from rival bank Abbey in Kingston, was handing out leaflets to Northern Rock customers advertising Abbey's super saving range.
An Abbey spokesman said: "Clearly Abbey staff are taking the initiative and ensuring Northern Rock customers are aware of other highly competitive savings deals."

http://www.telegraph.co.uk/money/main.jhtml;jsessionid=XBV5D2AH3XHJZQFIQMGCFFOAVCBQ UIV0?xml=/money/2007/09/14/bcnnorth414.xml

P.I. Stazzer-Newt
09-14-2007, 03:48 PM
Doesn't the UK have the equivalent of the SPIC? Aren't ordinary depositors insured by the gov't?

Damned if I know - and I've worked in treasury and for two major banks what's SPIC?

On the second point the answer is "usually not" - you could take a look at the BCCI story where the depositors lost out heavily but these were not private individuals - the Govt. may take extraordinary action - there is, after all, nothing really wrong with the Northern Rock business model.

Gary E
09-14-2007, 04:10 PM
Ahh... BCCI
Bank of Crooks and Criminals.... Inc
Was that Nick Leason's deal or am I thinking of some other crook??

What happened to the DEPOSITS from the normal little people?..
did they get their money back??

P.I. Stazzer-Newt
09-14-2007, 04:39 PM
Ahh... BCCI
Bank of Crooks and Criminals.... Inc
Was that Nick Leason's deal or am I thinking of some other crook??

Nope, that was Barings

What happened to the DEPOSITS from the normal little people?..
did they get their money back??
Don't recall there being any normal little people in that story, mostly corporate entities including some local government bodies - they lost money.

John of Phoenix
09-14-2007, 04:54 PM
I think you mean SIPC, Norman. Security Investors Protection Corporation guarantees the return of stock and bond certificates if a member firm fails.

FDIC insurance covers the first $100,000 deposits at member banks.

09-14-2007, 04:56 PM
Good thing that could never happen here....

09-14-2007, 08:16 PM
Uh...do we got problems with Lloyds then?

and no matter how much I have on deposit, my atm will only let me have 500 bucks a day......and B of A got very upset with me when I made a 10K withdrawal without prior notice......

George Roberts
09-14-2007, 08:31 PM
One document shows deposit insurance is $27,900 (conversion from pounds) in the United Kingdom.


Milo Christensen
09-14-2007, 09:14 PM
The bank's stock dropped 30%, somebody's buying it. So it looks like Northern Rock has turned itself into an extremely attractive takeover target.

The run on the bank is stupid, and the BoE had to step in, but on the other hand the BoE isn't helping by
leading a bail-out two days after primly warning that such lending sows “the seeds of a future financial crisis”.

Milo Christensen
09-15-2007, 07:05 AM
What is the rate offered for savings accounts in Great Britain?

One of the articles about the run on Northern Rock interviewed a couple that had two million pounds on deposit in the bank. The couple was quoted as saying that every pence they had was in the bank and they couldn't take the risk that the bank would close. I've heard that the British are great savers, but leaving 2 million pounds in a savings account doesn't make much sense to me.

Milo Christensen
09-17-2007, 12:42 PM
As of today, Northern Rock might just be the safest place around to stash your cash.

09-17-2007, 12:47 PM
talking to yourself again milo

Milo Christensen
09-17-2007, 12:50 PM
A man, you got me, again.

09-17-2007, 01:17 PM
As of today, Northern Rock might just be the safest place around to stash your cash.

Fears grow for British economy as panic over Northern Rock spreads

Experts warn that a decade-long borrowing binge has left Britain dangerously exposed to the fallout from the global liquidity crisis

Heather Stewart and Heather Connon
Sunday September 16, 2007
The Observer (http://www.observer.co.uk/)


George Roberts
09-17-2007, 04:53 PM
It was reported that the Bank of England will guarantee all deposits in solvent banks.

Northern Rock is solvent. There are some logistical problems. One is physically moving cash for those who want case rather than checks (common in runs on banks). $4 billion (perhaps pounds) in currency is a big pile of money.

While Northern Rock is solvent, a run may cause Northern Rock to sell assets for fire sale prices. That is not good for anyone. It forces the prices of related assets down for no rational reason. It enriches those who purchases those assets for no rational reason.


England appears to have a greater personal debt level than the US. Somewhat over the GDP of the country.