Northern Rock bailed out by Bank of England

[rabbit]

If NR goes bellyup the whole of the English banking system will
collapse, share prices will collapse, interest rates will soar, inflation will soar, there will be a huge run on other banks/building societies and this in turn will lead to some more collapses.
This will be a worldwide problem and not just English.

That is why N.R. will not go bell up. It is a profitable business and bigger than the Irish banks etc. If everyone tried to get their money out of one irish financial instituttion at the same time they would have a cash flow problem too.

 

[scallywag]

I just logged into the website, after only trying about 5 times. I used the methods described earlier in this thread: using firefox, when the busy message appears in the small window, just keep refreshing it by pressing F5 (instead of closing it and going back).

I took out all except about 1500 euro. Much prefer this than doing it by phone - I'd actually feel sorry for whoever has to take the calls and watch all this money leaving the bank.

Personally I think that money is pretty safe in NR but I'm going to make a once-off mortgage payment with the extra cash now. I think there's a possibility of more bank trouble in the near future, and cutting the outstanding mortgage seems a sensible option to me.

 

[Marion]

Dear Customer
May I begin by offering you my sincere apologies for any inconvenience you have suffered in dealing with Northern Rock during the last few days. Customer service is of paramount importance to us and due to the circumstances that surround us, you have been let down. Thank you so much for your patience, particularly when using our website which has been running very slowly due to the number of people working online.
Let me now reassure you. Your money is safe with us and if you want some, or all of it back, then you are perfectly entitled to it. Whilst you may have to wait a little longer than usual to receive it, you will get it. However, your savings are secure and there is no need for you to withdraw your money based on our recent announcement, and the widespread media coverage that has ensued. The Bank of England has agreed to provide a funding facility to enable us to manage through the current global liquidity crisis. They would not have done so, if we were not a solvent, adequately capitalised, well run bank. I hope this helps to reassure you.
Your custom is very important to us and I sincerely hope you choose to stay with us along with the vast majority of our customer base.
Yours sincerely
Adam J Applegarth
Chief Executive
16 September 2007

This is now posted on the Northern Rock website.

Marion

 

[pudds]

I finally logged in at 3am Saturday morning and closed my account.
Dont expect the cash to leave NR till Tuesday at earliest.

WORSE CASE SENARIO.

The Protection Scheme: First €3000 of our cash is guaranteed and 90% of the balance up to €50k. Dont know what happen folk with more than 50k

And this is assuming that the Protection Scheme, holds up if we have to rely on it but I don't see it going down to that, I hope.

 

[europhile]

Dear Customer
May I begin by offering you my sincere apologies for any inconvenience you have suffered in dealing with Northern Rock during the last few days. Customer service is of paramount importance to us and due to the circumstances that surround us, you have been let down. Thank you so much for your patience, particularly when using our website which has been running very slowly due to the number of people working online.
Let me now reassure you. Your money is safe with us and if you want some, or all of it back, then you are perfectly entitled to it. Whilst you may have to wait a little longer than usual to receive it, you will get it. However, your savings are secure and there is no need for you to withdraw your money based on our recent announcement, and the widespread media coverage that has ensued. The Bank of England has agreed to provide a funding facility to enable us to manage through the current global liquidity crisis. They would not have done so, if we were not a solvent, adequately capitalised, well run bank. I hope this helps to reassure you.
Your custom is very important to us and I sincerely hope you choose to stay with us along with the vast majority of our customer base.
Yours sincerely
Adam J Applegarth
Chief Executive
16 September 2007

Mandy Rice-Davies springs to mind.

 

[priscilla]

just a word of warning to anyone who has made a telephone transaction, I got through to NR Dublin office fri afternoon and requested a withrawal which I was reassured would go ahead, I eventually got into my online account and there was no transactions pending. Needless to say I made my own online transaction just in case.

 

[Marion]

Yes, I would like to be able to confirm that my transaction went through, but without a password this is not possible.

Marion

 

[ajmull]

If people don't withdraw their money, their money is safe. The only threat of insolvency is caused by depositers themselves.

Would I be right in thinking, therefore, that if NR does not open its doors on Monday and is insolvent because of the deposit run, will cheques and online electronic transactions still 'pending', not be honoured?

Well Sapmanie, I note your post calling me a "Dumbass Depositor" has been withdrawn. You will be glad to hear that my transaction went through. You, of course, are leaving yours on deposit and buying NR shares. Let us know how you get on, won't you?

 

[thewatcher]

That is why N.R. will not go bell up. It is a profitable business and bigger than the Irish banks etc. If everyone tried to get their money out of one irish financial instituttion at the same time they would have a cash flow problem too.

But how deep are the BoE going to put there hands in their pockets ?

I also think NR are safe but there is the potential for them trousers to have to be 24Bn or so deep, i spent too much time on another site with the tin foil hat brigade recently and as a consequence of this took most of my funds out of NR a no. of weeks ago bringing myself well in under the protection scheme amount.
The problem is if everyone else in the uk and Irl is trying to take out their money the risk of default greatly increases and i would be reckless to my own personal financial health not to get in there first and try to protect the substantial amount of interest due to me.

I don't like running with the herd but this is the vicious circle we are now in,if anyone is going to bring down NR it's more than likely the people with the money in it,but there you go !

 

[Marion]

I don't like running with the herd but this is the vicious circle we are now in,if anyone is going to bring down NR it's more than likely the people with the money in it,but there you go !

Maybe the management of the company should have foreseen this when they were aggressively pursuing credit to increase market share. Yes we all benefited by increased interest rates but that doesn't mean that we should not protect our own interests.

I don't feel any guilt for withdrawing my funds (hopefully!).

My contract with the bank is to earn interest and to feel that my money is safe.

If events conspire to threaten this well I don't have any loyalty.

Marion

 

[priscilla]

Marion, according to NR's website their email address is direct.saver@northernrock-ireland.ie. Best of luck, Priscilla.

 

[Marion]

Thanks priscilla.

Marion

 

[sapper]

Just withdrew the majority of my funds from NR. Was thinking the same as what all the pundits the politicians were saying and that the only thing at risk was NR's profits and their ability to offer mortgages to the UK market and that my money was safe as houses....

but then got to thinking that

1) The BoE decision to offer loan facilities to NR based on it's viability as a business was probably based on the banks position as it stood on Thursday and did not factor in the resulting effect of it's announcement on NR's customers deposits. I wonder how much that viability has been eroded since Thursday? And therefore how long is the BoE's credit line?

2) It seems that the BoE will not offer the same facility to anyone who buys out NR, so if someone did buy it they wouldn't be able to run the NR business model anyway. BBC.co.uk poimts out that the potential buyers would be better off wooing the mortgage customers themselves rather than buying the loan book outright. Therefore the "White Knight" thing probably won't happen - it's down to whether or not NR's customers withdraw all of NR's cash and then how much the BoE will be willing to support NR after that. If that lifeline stops, well then the depositors would have to wangle their money from the FSA or whatever is left of NR

3) withdrawing my money will not affect the outcome of this either way, so whats the harm of taking it all out for a few weeks? If NR is still standing in 3 weeks and no-one else offers the same deposit rates, I can always put my money back at the cost of a few weeks interest.

 

[gearoid]

1) The BoE decision to offer loan facilities to NR based on it's viability as a business was probably based on the banks position as it stood on Thursday and did not factor in the resulting effect of it's announcement on NR's customers deposits. I wonder how much that viability has been eroded since Thursday? And therefore how long is the BoE's credit line?

The run on the bank was estimated as being 2 billion on friday alone, instead of the actual 2 billion over two days. So, the run was factored in. It is not as if something like this has not happened before.

I am withdrawing my money but it looks as if the Chancellor, if not the BoE, has left himself very few options but to support the savers in the event that funds run short. Having stated that NR is solvent he risks his position and reputation in the event of savers losing out. Financially BoE could pull the rug in the event of solvency issues, but from a political viewpoint any effect on NR savers would be cataclysmic. The Tories have sought to link this crisis to the previous Chancellor's stewardship of the economy over the last few years, so the Labour government have a vested interest in seeing savers receive all their money.

What shocks me is the BoE's view that they only let NR continue in business based on thorough reading of the books this week. If that hadn't gone well we would have been toast.

 

[sapmanie]

del

 

[murray]

Just managed to log into NR and withdraw majority of money. ( I ordered a cheque)
only left approx 1700 in.

delighted & relieved........... !!!

how long do you think it will take to get the cheque?
Where is everybody's money going to go? Rabo?

 

[askew70]

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/16/cncredit116.xml

Adam Applegarth, the chief executive of Northern Rock, has made a direct appeal for a white knight takeover bid, amid mounting speculation that the struggling bank is preparing to break itself up.

In an interview with The Sunday Telegraph, Applegarth admitted that it would be a "long slog" for the company to continue on its own. He also acknowledged that the company's business model was no longer viable, due to the bank's over-reliance on wholesale funding...

Is that Telegraph headline another example of a bit of scaremongering by another part of the media? Within the article there is no quote from Applegarth which supports the Telegraph statement that he is actively appealing for a takeover. The only relevant quote from him is in the third paragraph where he is quoted as saying "But I guess it's up to the bidders to make a bid".

It may be semantics, whether Applegarth is actively seeking a takeover or just resigned to the fact that it may happen, but in the current climate of people seeming to panic about every suggestion that NR are about to go under, that Telegraph headline seems misleading. People who are already nervous may read a headline like that and jump to the conclusion that Applegarth himself is panicing, which is in contrast to the statements that Applegarth is making to the media even tonight.

 

[beara]

What shocks me is the BoE's view that they only let NR continue in business based on thorough reading of the books this week. If that hadn't gone well we would have been toast.

This was pretty shocking and my primary reason for withdrawing my finds.

 

[Jethro Tull]

probably Rabo short term, after that I'll have a look at whats on offer elsewhere and decide.

 

[Jethro Tull]

just logged back in. Requested 23k last night and it was down as 'pending'. Now I have no pending requests and my full balance is still in the account. should i just try again?

Edit: Ignore this post, was looking at the wrong thing!!! However by refreshing by using F5 rather than closing and reopening the window I got in in no time, thanks whoever it was that posted that tip!!!