Jump to content

Queues form outside struggling UK bank; calm urged

Add links
Unchecked
From Wikinews, the free news source you can write!

Saturday, September 15, 2007

Queues forming outside a Northern Rock branch in Brighton, East Sussex.
Image: Dominic Alves.

Nervous savers have re-formed queues this morning outside many branches of Northern Rock, after the £2.68 billion bank took an emergency loan from the Bank of England, the UK central bank.

Shares in the bank had dropped 25% by lunchtime yesterday in London – and stood nearly 60% lower from their high of February – after the Bank of England acted in its capacity as "lender of last resort" to provide Northern Rock with short-term financing to enable it to continue operations.

The Bank of England hasn't acted as lender of last resort since 1973, when the collapse of Cedar Holdings – a pioneer of second mortgages to UK home-owners – threatened a crisis in the country's banking industry.

Northern Rock has been hit hard since June this year by the turmoil in world credit markets. Although only 0.24% of its assets are exposed to subprime US housing debt, the bank's business model saw it grow its loan book by 43% in the first six months of this year. Rather than lending money deposited with it by savers, Northern has borrowed aggressively in the short-term capital markets.

"Northern Rock is not a reckless lender," said Angela Knight, head of the British Bankers Association on national radio this morning. Urging the bank's savers not to withdraw their money in panic, "the mortgage lending it does well and it does in a high quality, high calibre way," she added.

But savers queuing to withdraw their money from Northern Rock today said they were "horrified" by the Bank of England needing to step in.

"I am going to take out the lot, every penny," said one Northern Rock saver to Bloomberg as he queued outside the bank's West End branch in London.


Sources

[edit]
Wikipedia
Wikipedia
Wikipedia has more about this subject:

Share this:  E-mail this story Share on Facebook Share on reddit.com Share on LinkedIn.com Share on twitter.com


This page is archived, and is no longer publicly editable.

Articles presented on Wikinews reflect the specific time at which they were written and published, and do not attempt to encompass events or knowledge which occur or become known after their publication.

Got a correction? Add the template {{editprotected}} to the talk page along with your corrections, and it will be brought to the attention of the administrators.

Please note that due to our archival policy, we will not alter or update the content of articles that are archived, but will only accept requests to make grammatical and formatting corrections.

Note that some listed sources or external links may no longer be available online due to age.

The text of this article is licensed under the terms of the Creative Commons Attribution 2.5 License

This page is archived, and is no longer publicly editable.
Articles presented on Wikinews reflect the specific time at which they were written and published, and do not attempt to encompass events or knowledge which occur or become known after their publication.

Got a correction? Add the template {{editprotected}} to the talk page along with your corrections, and it will be brought to the attention of the administrators.

Please note that due to our archival policy, we will not alter or update the content of articles that are archived, but will only accept requests to make grammatical and formatting corrections.

Note that some listed sources or external links may no longer be available online due to age.

The text of this article is licensed under the terms of the Creative Commons Attribution 2.5 License
Retrieved from "https://en.wikinews.org/wiki/Queues_form_outside_struggling_UK_bank;_calm_urged"