Northern Rock bailed out by Bank of England

Item from Sky News web site:

A Government pledge to underwrite customer deposits at Northern Rock seems to be convincing savers to keep their money in the bank.

Lengthy queues which built up after it was hit by the mortgage lending crisis in the US are tailing off.

There are also reports customers have started to pay money back into their accounts.

Earlier Northern Rock shares climbed 10% - to the joy of investors who have lost more than 50% of their stock value over the past few days.

The reverse came after Chancellor Alistair Darling said the Government would guarantee all existing deposits with Northern Rock.
 
beara said:
Just logged in now to check transfer (i did a same day electronic transfer on Saturday). Money has left NR but no sign of it in BOI yet. So out in cyberspace somewhere. I'll be happier when it arrives in my BOI account.
Click to expand...

Is it showing up as a pending transfer or has it left your NR Account and reduced the balance on your account?

I also did a same day transfer early on Sat. morning which is still showing as pending. Rand NR in UK who were unable to tell me when transfer will occur.
 
Afuera said:
Those mortgage based assets they're holding aren't exactly in very high demand at the moment. What's worse is that the mortgages that NR were lending were at very tight margins which may not be able to turn a profit given the new reality facing the markets (i.e. lack of credit and liquidity).
Click to expand...
They have also sold on a lot of those assets as ABS (asset backed securities), so they do not own the majority (some 70-odd percent) of the mortgages they have issued.
 
New message on NR web site just now......
A message From Northern Rock

May I begin by offering our customers my sincere apologies for the anxiety and inconvenience that we have caused you. I know how worried many of you must have been.

Today I want to make it emphatically clear to all Northern Rock customers that we are open for business as usual.

We remain a well-managed company and continue to be a safe place for your savings, loans and mortgages.

The simple fact now is that the Chancellor has made it clear that all existing deposits in Northern Rock are fully backed by The Bank of England and are totally secure during the current instability in the financial markets.

We are all working night and day to provide you with the service that you expect from us and deserve from us. And I would like to express my appreciation to our staff for their work and commitment over the last few difficult days.

Above all I would also like to thank all our customers for their support and understanding.

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.

These have been troubled times but Northern Rock will prevail. We will not let you down.
Adam J. Applegarth
 
Afuera said:
Source?
Click to expand...


Here're the details from an article given earlier:


residential loans not subject to securitisation
(or not already pledged) : £21bn
buy-2-let loans not subject to securitisation
(or not already pledged) : £6bn
Unsecured loans not subject to securitisation £7.8bn

Given inferior quality of some of these, the article assumes they
could be good for a pledge of £30bn.

Also, securities for sale and loans to other banks: £15bn

So NR good for £30bn + £15bn = £45bn

Total deposits of all types: £34bn
Therefore, according to this articles's assumptions, NR is solvent.

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2007/09/rock_the_numbers.html
 
[broken link removed], shows it was A+ rating before and now downgraded. Where is the source of the B rating?
 
Apologies if this has already been linked - Irish Banks have made the front page of ft.com

Irish pessimism seen as overdone

http://www.ft.com/cms/s/0/c979a8ee-655a-11dc-bf89-0000779fd2ac.html

Emer Lang, analyst with Davy, the largest independent broker, says AIB, Bank of Ireland and Anglo Irish bank depend less on wholesale funding for their lending book than other European banks.
For AIB the figure is around 44 per cent, Bank of Ireland 46 per cent and Anglo 36 per cent. Irish Life & Permanent is the only institution that appears out of step, with two-thirds of its loan book funded by wholesale lending.
Click to expand...

reg
 
So would it be accurate to say that NR is in fact the safest place to place your money now, seeing as it is the only bank that has a guarantee to depositors for the total sum of their deposits from the BoE?
 
Up to 12 noon today Sept 18th

I haven't been able to access the accounts page at all today - just get as far as >>


Important customer notice
Unfortunately, the system is currently very busy.
We apologise for any inconvenience caused and ask that you try again later.
Thank you for your patience in this matter.


any one else experience this today ?
 
On the BBC News last night, Huw Edwards mentioned that (put on Welsh accent) "You can catch up on all the news on Northern Wreck on our website bbc etc."

Freudian slip?
 
Millix said:
Up to 12 noon today Sept 18th

I haven't been able to access the accounts page at all today - just get as far as >>


Important customer notice
Unfortunately, the system is currently very busy.
We apologise for any inconvenience caused and ask that you try again later.
Thank you for your patience in this matter.


any one else experience this today ?
Click to expand...

Nope - got it about an hour ago on 1st attempt. Slow - but not as bad as last night. Essentially its the same issue ie vol of traffic thats slowing it up.

Think myself at this stage that there should be less reason to panic now given the assurances from HM Treasury.
 
went in to check transaction status, got to the part where I enter password and then got;

We regret that this service is currently unavailable. Please try again later, or telephone our administration office on (01) 480 6050 for further assistance. Opening hours 09.00am - 17.00pm (GMT) Mon - Fri
 
If it was me, I'd be more worried now about some other banks in both UK and over here.
What's going to happen going forward is Credit ratings will determine where people put their deposits.
The better the credit rating for a bank the better chance you have of
getting your money back if anything did happen to that institution.
The smaller banks may have problems going forward.
 
I got on to my wife's account this morning around 9:30am after a few attempts. Managed to request a transfer. Got onto my own account about 12:10pm and arranges another transfer.

I haven't cleaned out the accounts or closed them. I left just under 3,000 euro in each. That's money I can afford to have tied up if, as seems ever more unlikely, the worst came to the worst. Hopefully the money will get to our current account in AIB by Friday.

As for the complaints about the performance of NR's online system... I understand the frustration, but I see no way in which anyone could try and legislate for the level of activity during a bank run. To be able to provide even a modest speed of access during a bank run would require an enormous investment in infrastructure. This extra capacity would just lie idle more or less forever given the rarity of bank runs in this part of the world. To me that's a poor investment.

Even though I believe money is 99.9% safe at this point in NR, I have no loyalty to the NR brand - only loyalty I have is to my future. I will be taking a fresh look at how I spread the risk of my savings and consider maybe putting a portion of it off the mortgage.
 
DC27 said:
As for the complaints about the performance of NR's online system... I understand the frustration, but I see no way in which anyone could try and legislate for the level of activity during a bank run. To be able to provide even a modest speed of access during a bank run would require an enormous investment in infrastructure. This extra capacity would just lie idle more or less forever given the rarity of bank runs in this part of the world. To me that's a poor investment.
Click to expand...

This specific topic has been moved to a separate thread of its own, so I won't bore anyone here with my arguments against this view again. However, some people here are jumping to the conclusion that providing a decent service requires huge investment of money. I don't understand why people just assume that this is purely an issue of cost.

And incidentally, a quality service doesn't always have to mean one that provides you with instant access regardles of how many others are using the system at the same time. One aspect of quality is failing gracefully when failing at all i.e. a good system should provide users of the service with some meaningful information when it hits problems, not just let people sit there in the hope that their login succeeds (which a lot of the time they don't). Simply blocking the majority of the connections, even with a "try again later" page, does not constitute a reasonable attempt to address the problem if your login still fails as often as not when you do get a login prompt. If your local bank branch on the street opened its doors at arbitrary times, for a few minutes at a time, and gave you no clue as to what those times were, I would hope that people would be upset, so why forgive poor quality of service online?

...okay, I have veered into the scope of the other thread more than I had intended, but hopefully the moderators will consider enough of this post sufficiently relevant to the general view people are adopting of NR's service, and online services in general, to leave this post in this thread.
 
maura said:
[broken link removed], shows it was A+ rating before and now downgraded. Where is the source of the B rating?
Click to expand...

implied rating by credit default swap fees.

this means that NR credit default swaps were trading at a price consistent with a B credit rating. Checked this the day the original thread was started in the great financial debates forum
 
You must log in or register to reply here.
Back
Top