Northern Rock

[Storm22]

As someone who has a chunk of savings with Northern Rock, should i be nervous.

 

[ClubMan]

In relation to what exactly?

 

[shanegl]

That they'll go bust and he'll lose his money presumably.

The Central Bank guarantees 90% of your deposit up to a maximum of €20,000.


Personally I see this as a far-fetched risk.

 

[markowitzman]

I do not. I would withdraw personally. Banks do go bust also. Despite the markets spiking upwards today the fact the Fed is propping things up is not good news. You have money on deposit which is to be seen as a low/no risk investment. If you want risk buy the bank shares which may ormay not have some merit at this time. However the market cap of this bank has halved in no time which is a worry.

 

[z109]

Personally I see this as a far-fetched risk.

Can you back this up? I'm sure lots of people said the same thing in 1929. (Not that I disagree with you, but it's not very reassuring to offer a personal opinion unless you have something to back it up with).

 

[KalEl]

To be honest reading about their chief executive today saying "it's ok, we're not going bust" would worry me a little.
Northern Rock's problem apparently is that it doesn't lend out its deposits...instead it borrows the funds which has become very expensive hence the problem.

 

[z109]

To be honest reading about their chief executive today saying "it's ok, we're not going bust" would worry me a little.
Northern Rock's problem apparently is that it doesn't lend out its deposits...instead it borrows the funds which has become very expensive hence the problem.

In addition, it lends out it's deposits and then leverages those debts to the debt markets as securitisations. Beginning to sound familiar to anyone?

On their [broken link removed]:
"January saw the first of Northern Rock’s Granite residential securitisation issues for 2007."

If securitisations become a problem, liquidity could be damaged. The consensus among people who know about these things seems to be that borrowing may become more expensive for NR, so they may suffer lower margins - this has been the driving force for their lower share price. Apparently.

As I know no more than I have read over the last few days and understand less of it, I have reduced my savings in NR to 20k. I would rather risk some interest payments than the money I owe the taxman and my pension, no matter how vanishingly small the risk is.

After all, we have, apparently, just had a 25-sigma event!

 

[pat127]

As I know no more than I have read over the last few days and understand less of it, I have reduced my savings in NR to 20k. I would rather risk some interest payments than the money I owe the taxman and my pension, no matter how vanishingly small the risk is.

As a matter of interest, did you find a safer home for the funds?

 

[CCOVICH]

This is already being discussed here.