Northern Rock bailed out by Bank of England

[ninsaga]

Its the share value what with be the big determining factor for a take over. If it drops further then other banks will probably move in.
NR still have a sizeable loan book.

 

[Lionheart]

We all owe a debt to those who paniced and took action. If people had not queued for hours outside the offices in the UK, we could have found ourselves in in a serious situation a few weeks time.

Hats off to the "silver haired brigade" who forced the UK government to take action. Without the action of those people we could very well have been thrown to the wolves.

 

[z101]

I did a 'same day transfer' very early Sunday morning, when the option to do so was still there, but it is showing pending in my NR account.
Anyone done something similiar ? How long does it take to LEAVE account etc ?

 

[magicbeans]

I did a 'same day transfer' very early Sunday morning, when the option to do so was still there, but it is showing pending in my NR account.

Anyone done something similar ? How long does it take to LEAVE account etc ?

That's the question probably 20,000 others Irish a/c closers are asking. Its a waiting game. Some of smart ones who got in early and cleaned out their accounts Fri morn got their money this evening, but I'd say the rest of us could be waiting much longer.

 

[simp]

I was trying to be sensible and hold off - but I caved, and as soon as I got through to the website I withdrew everything... I am a sheep! Baaaa! Unfortunately the best way to avoid being stampeded is to run in the same direction as everybody else...

Anyhow - fyi - I had been trying with Firefox on a Mac with no luck, but when I switched to IE7 on PC I got through. Just keep on refreshing the "site busy" page and you'll be in within 30 seconds (hopefully!)

Just applied for a Rabodirect account...
Frying pan / fire..?
Baaaa.

 

[McVittie]

The decision by the BoE and UK Government to guarantee the deposits of NR customers is unprecedented. It is an extraordinary development that drives a coach and four through UK policy.

It is good news for depositors and not so good news for bankers and governments.

Whilst bank runs are quite common what is uncommon about this one is the reason. NR got into trouble because of risks inherent in what was this time last year lauded as a valid “alternative banking model”.

The fluttering of the trailer park bad debt butterfly in the US and resultant global credit crunch may well give rise to a fundamental re-assessment and regulation of the global and local financial markets systemic risks and banking systems.

The guarantee will send shock waves reverberating across the world as governments elsewhere take stock of their safety net provisions.

 

[z101]

Smart ones?

Lucky ones more like. I was taking runs at the computer but still could not log in to NR.
Do you know how long it takes to leave your account under 'normal' circumstances?

 

[ali1971]

Hi,

Finally got in to the website, have been trying on and off since Friday. However, website stated that I have incorrect password and now have to wait while they post me out a new password. I'm sure it's the right password I was using as I had only checked my balance a week ago.
Had anyone else similar problem? Most of my banking is online but am now really skeptical after this experience.
Good luck to the rest of you getting your money.

 

[rabbit]

Don’t worry Sapmanie, you "superior intellect types" have always existed. (As stated sitting in the first class bar in the Titanic, laughing at the ignorant clambering for the life boats, while quoting technical statistics"

Not a fair analogy. The people in the bar on the Titanic did not cause the ship to hit the iceberg / the accident to happen. A better analagy perhaps would be a small group who cause a crowd to stampede for no reason, and the panicing crowd gets bigger and bigger.

The fuss will die down in a while, everyones deposits will be safe, and the profitable Northern Rock will be bought by another bank. Just as well as its a big UK bank, as the guarantees - as explained by other poster - are bigger and better. I wonder what would happen if all or most of the depositors in a smaller financial institution - here or in the UK - wanted their money out at the same time ?

 

[Afuera]

The decision by the BoE and UK Government to guarantee the deposits of NR customers is unprecedented. It is an extraordinary development that drives a coach and four through UK policy.

Has the BoE come out publically to agree with or even comment on the statement by the Chancellor yet though? I'm not sure we can say that there is a guarantee on all the deposits of NR customers yet until that happens.

Besides that, if you look at the wording of the statement, it was written in the conditional tense and is preceeded by a "if it is deemed necessary" clause. He could have said "if Northern Rock goes bust we will guarantee that all customers will get their deposits back" but he didn't. That would have put things beyond a doubt, what he said is nowhere near being definative and appears to be full of wiggle room.

I think those that have taken their money out or are going to are doing the right thing given the circumstances.

 

[Calico]

They decided to lock my a/c even though I was entering the correct password and user id, so I am not impressed at all.

 

[McVittie]

I agree the wording provides "wriggle room". No government will sign a blank cheque.

Depositors were right to take out their money and many will continue to do so.

Trust has been broken and NR will probably pay and lose its independence.

The run may have been averted. Tomorrow will tell.

NR does not fit the "too big to fail" doctrine which makes the "guarantee" quite unusual until the wider context is factored in.

The BoE, FSA and HM Treasury in a joint EU submission (1995) stated:

"Guarantee schemes should not be designed to prevent or manage financial crises, as their most important role is to mitigate the effects of an institution’s failure by providing compensation. Measures to achieve financial stability should be delivered mainly through ensuring effective supervision. Robust crisis management procedures are also essential, as, unless planned for, normal working arrangements tend to come under severe strain and collapse altogether in crises, just when decisions are needed most urgently."​

"The UK authorities believe that EU directives on guarantee schemes should continue to allow Member States to limit the amount of compensation payable andmaintain some element of ‘co-insurance’. The UK authorities believe that allowing consumers to bear an acceptable level of the cost should an institution fail, represents a proportionate way to address moral hazard."

I suggest that "ensuring effective supervision" will take on a whole new dimension from now on.​

 

[magicbeans]

. . . A better analagy perhaps would be a small group who cause a crowd to stampede for no reason, and the panicing crowd gets bigger and bigger.

The fuss will die down in a while, everyone’s deposits will be safe, and the profitable Northern Rock will be bought by another bank. Just as well as its a big UK bank, as the guarantees - as explained by other poster - are bigger and better. I wonder what would happen if all or most of the depositors in a smaller financial institution - here or in the UK - wanted their money out at the same time ?

- Ahh the calm voice of misguided "reason" again. Next thing we’ll be told is “let them eat cake”

I think the financially secure, along with NR, BoE and the British Government may be missing the point.

If a statement was issued saying something along the lines of "Dont worry even if NR goes bust because of the bank run, no matter how silly the idea of a bank run is, we the BoE will ensure everyone gets their money within a few weeks so that they can use it to buy / pay off whatever they need to, when they plan to" - This would calm things down, but we all know that such a promise is not possible - hence the bank run.

Ordinary people are queuing to get their money out because they need it now to pay for sites/houses/cars/holidays. They cant afford to take even the small a risk that the irrational bank run could cause NR insolvency problems, even temporary ones, as people may then have to wait 2 months to maybe 2 years to get their money back from BoE/British Gov.

i.e. even a small bank run causes a bigger and bigger one - its a vicious circle. The run may have been started by "panicers" but now the majority queuing just want to make sure they have access to their money in the next week or so - not the next few months/years. - I don’t think this is asking too much.

 

[ohno]

Closed my account online early Saturday morning, electronic transfer to nominated account. Just managed to log in now. No account details at all shown. No account. Not even "account x closed". Emailed them via secure email for them to confirm everything ok. Probably fine but... !

 

[GeneralZod]

Closed my account online early Saturday morning, electronic transfer to nominated account. Just managed to log in now. No account details at all shown. No account. Not even "account x closed". Emailed them via secure email for them to confirm everything ok. Probably fine but... !

That happened to me several months ago. It was a back-end server problem. When I logged in again a few hours later the accounts appeared again.

 

[GeneralZod]

Has anyone that made a withdrawal request on Saturday actually seen the money leave their account yet? My transactions are still showing up as pending. They are normal "3 - 4 working day" withdrawals but I'd expect to see them processed by now. Normally my money spends a few days in cyberspace/NR's account on the way out. Do they manually process all of these transactions?

 

[TSThomas]

New website message, I'll cut to the interesting portion;

I am also pleased to announce that any customer who has paid a penalty for withdrawing their investment, will have the penalty refunded if they re-invest the same amount in the same type of account by 5th October 2007.

State guarantee + Refund of penalty for withdrawls. Wonder how many will return...

 

[Gautama]

Has anyone that made a withdrawal request on Saturday actually seen the money leave their account yet? My transactions are still showing up as pending. They are normal "3 - 4 working day" withdrawals but I'd expect to see them processed by now. Normally my money spends a few days in cyberspace/NR's account on the way out. Do they manually process all of these transactions?

Dunno but I'm really beginning to sweat.
I phoned thru' on Friday, just after 4pm, missing that cut-off time.
I opted for the "same day" €25 option, and was informed the money would be in the account by 4pm Monday afternoon.

It's not there...

Can't login online to see the status of the money.

 

[maura]

I did a transfer on Friday morning 6:30am, normal transfer not same day and the money is in my nominated bank account this morning. Just wanted to reassure others.

 

[Fido]

Just logged on this morning at 8.15. The website is working as usual. I did small transfer out just to see, no problem. I'm leaving my money in but he amount I have comes in under the guarantee scheme anyway.