Northern Rock Bank: '£2BILLION withdrawn'

[earth mom]

:wow: That's some chunk of change! What if this was happening at Bank of America? Would the corporate media bastards even report it?!


Northern Rock Bank: '£2bn withdrawn'

"It has been estimated that customers have so far withdrawn between £1.5 billion and £2 billion.

Some banking analysts also claimed as much as £12 billion could be moved away from the bank during the coming days as a result of the current problems, representing around half of the group's savings balances.

Savers had around £24 billion saved with the bank according to its interim results, with just £5.6 billion of this held in branch accounts.

Nearly £10 billion of the group's total savings is in postal accounts, while a further £4.13 billion is in internet accounts, £3.78 billion is in offshore accounts and £440 million is in telephone accounts.

This suggests that queues on the high street to withdraw money could be just the tip of the iceberg."

More:
http://www.channel4.com/news/articles/business_money/northern+rock+2bn+withdrawn/811752


also:


Customers queue to get money back

"Northern Rock customers have formed long queues outside branches across the UK.

Many said they felt no loyalty to the bank which was holding their life savings.

Others said they did not trust the Government's words of reassurance over the weekend."

More:
http://www.channel4.com/news/articles/business_money/customers+queue+to+get+money+back/810962

[aquart]

1. Now that's a run.

[DS1]

2. Sorry, I'll put some back

/wishful thinking

[muriel_volestrangler]

3. Northern Rock deposits now guaranteed by government

The government has said that it will guarantee all deposits held by the embattled Northern Rock bank.

The pledge by Chancellor Alistair Darling is an attempt to reinforce confidence in the beleaguered firm.
...
Banks are already covered by the Financial Services Compensation Scheme which protects 100% of the first £2,000 in any bank account and 90% of the next £33,000 - giving a maximum payout of £31,700 if a bank did go bust.

But under the measures unveiled by Mr Darling, Northern Rock savers would not lose a penny, regardless of how much they had deposited.

http://news.bbc.co.uk/1/hi/business/6999615.stm

The estimate was that the Northern Rock mortgages that could be used as collateral for the Bank of England loan are worth about £30 billion, and the deposits with NR are about £24 billion - so in theory everything was already covered. But the amount of withdrawals has forced the government to make this explicit guarantee.

The question is whether they';re going to have to say this for other lenders which has some difficulty - note the share price movements later in the BBC article:

"Shares in other mortgage banks also suffered, with Alliance & Leicester slumping in late trading to finish 31.3% lower. Bradford & Bingley shares were also down, losing 15.4%."

That shows the market players think the profits of those banks will be hit hard too - which may start a run on them tomorrow, because people just don't feel confident.

[Javaman]

4. I guess they got up early to start the printing presses, sounds like the US. nt

[muriel_volestrangler]

5. They're not creating the money

effectively, they would end up owning the mortgages, if the bank were to go bust. They're actually lending to the bank at a higher than normal rate of interest, with the mortgages as collateral. The government should end up making a profit, if the figures of how much the mortgages are worth are correct (at the expense of the bank shareholders - which is why the bank's share price is plummeting). However, if there were a crash in house prices, and people started defaulting on their mortgage payments before the government sells the mortgages on to other banks, then the government (ie we British taxpayers) would lose out. Effectively, the government has gone into the mortgage business for a bit.

[rucky]

6. They don't have an equivalent of FDIC?! n/t