Northern Rock bailed out by Bank of England

ajmull
Well Sapmanie, I note your post calling me a "Dumbass Depositor" has been withdrawn.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?
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You're taking this a bit personally ajmull (and I still see my post btw), but I certainly will let you know how I get on. I will also let you know how much interest I'll get at the end of the year, some of which will be your €25 (Thanks for that btw). When I sell my shares, I'll let you know how much of a killing I've made.

BTW, if you got your money, then what were you panicing about!? Answer that.

I've read all 22 pages (to date) of posts, and I am very much stunned by panic and nonsense going on. I've never experienced such herd mentality in my life. There's a book in the making here! All you guys are going to have expensive egg on your faces after this (loss of interest on apparently large deposits, and €25 SDT costs) . It reminds me of the "Lotto fever" which gripped the nation when it started, or the property frenzy over the past number of years: Too many people with too much money and not a financial clue between them on how to mange it. Sad. Though it's situations like this where real money is made - if I may quote Benjamin Graham:

In the depths of a depressed or "bear" market the average person can see no ray of light ahead and can think only in terms of worse to come. So too, when an individual company or industry begins to lose ground in the economy Wall Street is quick to assume that its future is entirely hopeless and it should be avoided at any price. The two types of reasoning are similar, and equally fallacious.....The market is always making mountains out of molehills and exaggerating ordinary vicissitudes into major setbacks. Even a mere lack of interest or enthusiasm may impel a price decline to absurdly low levels. Thus we have two major sources of undervaluation: (a) currently disappointing results, and (b) protracted neglect or unpopularity.
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Sorry if I sound preachy, but standing outside looking in to this madhouse, a melee of wide-eyed pale-faced people, running around like headless chickens wringing their hands in fear, it's fascinating how 21st Century logical man so quickly turns into a grovelling fearful beast in the face of (financial) forces he can't understand, and how the dorment "safety in numbers" instinct so easily surfaces to take over his reasoning.
 
jason33
Panic - Yes.
Nonsense - I don't think so. Why should anyone keep their money in bank that might collapse? What is the sense in that?

I for one do not care about Northern Rock or in fact have loyalty to any bank. I gave my hard earned money to Northern Rock. I thought it was a safe place to save but I guess not.
My confidence in Northern Rock is shattered. Even if they rebuild - I for one, will not save with them again.
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That's perfect sense - my hard-earned money is also with NR and I have no loyalty to them nor any other bank either.

I understand your fear as I very much doubt you, like most average people, did any research into the bank other than the size of the deposit % on offer. So illogical actions are understandable and perhaps inevitable.

If you don't know what your money is being used for, or it's an amount you can afford to lose, putting it anywhere other then under the matress is very silly (IMHO).

Look at it this way: merely by having your money on deposit, it has been hemorgaging thanks to inflation - you have already lost, say 5% of your money in real terms. How come you weren't panicing about that?! You house has probably lost up to 3% this year alone - are you panicing about that?!

The key to your fear is evident in your misunderstanding of the situation described in your second sentance:
Why should anyone keep their money in bank that might collapse?
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It won't - that's the thing. And you can quote me on that!

People - R E L A X ! We'll look back and laugh at this one day!
 
sapmanie said:
It won't - that's the thing. And you can quote me on that!
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probably not but people are risk averse in general, and seeing as, in many cases, we are talking about huge proportions of peoples wealth they will run as soon as they get the faintest whiff of a rat. They look at the downside and have decided that 4.5% is not enought to compensate them for the risk (perceived or otherwise).
 
sapmanie said:
Sorry if I sound preachy, but standing outside looking in to this madhouse, a melee of wide-eyed pale-faced people, running around like headless chickens wringing their hands in fear, it's fascinating how 21st Century logical man so quickly turns into a grovelling fearful beast in the face of (financial) forces he can't understand, and how the dorment "safety in numbers" instinct so easily surfaces to take over his reasoning.
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No not preachy, just somewhat smug and patronising. It is dormant by the way.

People have lost confidence in a financial institution. It is perfectly normal for them in this situation to withdraw savings. People with I suspect a much longer memory than you have judging by the tenor of your posts to date, will remember ICI here, BCCI in the UK, and more recently Equitable Life. In those circumstances people lost life savings, though in the case of ICI, there was an Irish Govt. bail out. When people's life savings are in doubt, it is perfectly reasonable for them to exhibit concern.

If you want to buy NR shares go right ahead, but others were using NR as a supposedly ultra-safe haven for their money, not to speculate which is all that you're doing if you buy NR now.
 
geroid
No not preachy, just somewhat smug and patronising.
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Smug? No, you're mistaking that for intelligence. But that's your problem. I'm just trying to reassure people a little. I realise that's a losing battle in an air of stupidity and paranoia, but in the long run perhaps, just perhaps, will people remember that there was someone with a voice of reason.

The latest quote for worried depositors:


The City watchdog, the Financial Services Authority (FSA), has backed comments from the Treasury, saying it is confident that the Northern Rock is solvent and that savers could continue to deposit and withdraw funds. "To be absolutely clear, if we believed that Northern Rock was not solvent, we would not have allowed it to remain open for business," FSA chairman Callum McCarthy said.
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http://news.bbc.co.uk/2/hi/business/6997264.stm
 
sapmanie, you're basing your views on what you consider to be logic and dismissing customer actions as panic.

But shouldnt you consider the actions of customers in deciding whether or not NR is a good investment? If it has no customers then it has no future. Where is their new business going to come from after this debacle? Even if anyone want's to do mortgage business with them, where will NR fund it from?

Banks exist on customer faith. NR has none.

Your deposit is probably safe but I don't hold much hope for your shares.
 
Withdrew a large percentage of my savings at NR this morning. Some of it will be needed in near future, otherwise I would have kept it there. I don't think there is a danger of losing it just of it being tied up for a while if the worst happens.
It took just 3 minutes.
Discussion of share price removed by moderator -- see posting guidelines.
 
Is anybody actually going into the Dublin 'branch' this morning to withdraw? I'm on a day off and thought it might be worth going down there. Anybody?
 
PetPal said:
Is anybody actually going into the Dublin 'branch' this morning to withdraw? I'm on a day off and thought it might be worth going down there. Anybody?
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I was there Friday evening, where were only a 12-15 queing on seats in hall of their actual office. I went past the office (building) on the Luas 20 min ago and their must have been nearly 200 people queing on the street.

Towger
 
Finally got through to NR on sunday by phone to request a funds transfer. They said that i was speaking to the head office in newcastle and they were faxing all transfer requests to dublin. I asked what my balance was as i hadnt checked it in soem time but was told this information was not available and also they couldnt say when the transfer would happen as they were unable to access my account data. The girl said they were were unsure if same day option(ie monday) was available, they told me to check with MY bank if this was possible..She took my email but have had no contact.Dont think they made a great case for sticking with .now cant verify if the request was made as numbers/web/ are all inactive..
 
I'm probably wrong about this but, from what i can gather, the only people suggesting that we don't panic and leave our savings in NR are those who without savings of any significance (in NR).

Over the weekend I've read and listened to so many conflicting scenarios about this whole thing wil pan out. Nobody really know what's going to happen. On newstalk this morning Richard Curran was talking about the share price dropping further this morning and this the possibility of NR being bought out is quite high. Yet, the BBC guy (Robert Preston) was of the opinion that a buy out is unlikely to happen now for a number of reasons. ([broken link removed])

These guys are intelligent and knowledgeable yet with totally different views. So if they don't really know what's going to happen then what chance do we have? Hence the panic and bail out.
 
So far this crisis appears to be following the experience with similar crisis of the past. Whilst not a linear process nonetheless the following represents the process so far:

(1) First the bad news – known only to a few
(2) More hear usually institutional depositors
(3) Institutional depositors withdraw or refuse credit lines
(4) Ordinary pubic hear of bad news
(5) Run starts: Customer withdrawals exacerbate and worsen a liquidity problem (public run)
(6) Regulatory authorities decide to (a) support the bank whilst arranging a workout : this is the lender of last resort function kicking in or (b) let the bank fail and depositor compensation kicks in (if there is one in place)
(7) Provide public assurances that all is in hand.
(8) *Public continue to withdraw as all confidence is lost or:
(9) *Public accept assurances and immediate crisis is averted

  • *it is at this stage today

It seems from reports that people are still queuing. Unknown levels of withdrawals yet to arrive by post which would have been posted last Friday. At the same time bank shares are under pressure generally.

The only thing that can be done is to ensure enough cash/liquidity to meet demand…feed the crisis with cash in the hope this will deflate the public run on the bank.

What could happen next:

(1) Run dissipates and workout is successfully achieved (number of options possible at this time)

(2) NR may be forced to close its doors with the UK depositor compensation scheme kicking in. This is the process through which retail depositors will be paid up to certain limits within a certain period of time.


Public runs, the past, were manifested by queues on the street . This time there are unseen queues both online and by post. Online behaviour is a new phenomena.

In its systems nature: The public is aware that the NR problems were created by a wider systemic credit crunch issue.
 
Anybody have an idea how long a cheque will take to arrive? (ordered 10pm Sunday night 16/9/07)

Thanks!!,

M
 
converse2007 said:
NR may be forced to close its doors with the UK depositor compensation scheme kicking in. This is the process through which retail depositors will be paid up to certain limits within a certain period of time.
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This may have been a possibility if the UK government had not stepped in to reassure savers that their money is safe. Any change in this stance would result in a massive loss of faith in the Government and the resulting financial chaos would create a very unstable situation.

Providing funds to NR is very small fry compared to bailing out some of the larger banks. NR is a relatively small bank with a even a smaller number of savers.

The BOE is providing the necessary funds to ensure that the possible collapse of a small bank does not happen. This makes sense both from a political point of view and also from a financial aspect.
 
Got through on the 1850 315 115 number. Its in Newscastle - I have a 30 daynotice account and the girl asked me the account balanace, I was able to give the last transaction and so on. When I asked the balance she said she didnt have the figures available.

I have a 30 day notice account anyway she said it would take three to four days for a fax to get through to the dublin office and then they would process it and it would go through to my account.

To be honest she didnt instill confidence that she even knew what she was talking about - surely they are not paying out notice accounts in the advance of 30 days.

Ah well sure we'll see what happens - if the posting are right and its guaranteed up to 90%, things should be OK.

It seems like they need to get some lessons off banks here in how to disguise and cover up bad news.
 
I just got through by phone to Dublin office ;
01 4806050 fairly easily, first go (not 4805060 as I found listed elsewhere which I'd been trying, doh, and was constantly engaged)
she said the following line is even easier to get through on ...
01 6020324

My demand online account is locked, hence I opted for phone contact and asked for e-transfer which she said will take 4 or 5 days with the backlog. The other option was a cheque to be posted out, again to arrive in a few days, plus however many days it would take to clear once lodged elsewhere. They will post out a new password so I can watch my ac and see when the money transfers out.
 
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The irish website seems to be totally borked now... after the apologetic intro note screen i cant get any farther...
 
I got onto that ok too.
Are you using Mozilla Firefox are your web browser, seems to be easier to get in using that. And as somebody else suggested, try pressing F5 to refresh the NR home page each time before trying to get back in again.
 
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