Northen Rock [Merged Threads]

gt94sss2

sammyj25 wrote: »

I have some, given to me, should i sell them quick. or does anyone know if they get taken over would my shares be transferred to new bank. im in need of help here. Also who do i call to sell shares. thanks

Do you need the money now? If not, I personally wouldn't sell your shares.

If they get taken over, it depends on the offer as to whether you would get shares or cash..

Regards
Sunil

sikejsudjek

skid112 wrote: »

http://www.fsa.gov.uk/pages/Library/Communication/PR/2007/102.shtml
for all those worried.
the FSA judges that NR is solvent and exceeds its regulatory capital requirement.

NR is a sub prime lender, they even had a webpage up today still with an ad banner saying 'Open for Sub Prime Business' !

Yes the UK does have a sub prime, and NR is over exposed. They have lower deposit levels than other banks, and after today's run they will be lower still. Their entire business model of lending is risky, lending at 125% and 5-6x income, using finance from other banks at the Libor rate. The likely outcome is that they will be bought out by another bank. I don't see how they can survive. If I had savings in them, I'd move them out quick.

Dithering_Dad

isofa wrote: »

I guess that'll be at the same time we also point to the heard of flying pigs going overhead :rolleyes: 10 years is a long time in technology, pigs might well have harnessed flight!

Panicking causes the problem.

(Lavendyr can you reserve me a place in the queue? )

So true, panicking causes the problem, but the problem exists nontheless. I didn't panic during the petrol hoarding, I laughed at the people who were (much like you're doing now) and I said "UK run out of petrol? Yeah, and pigs might fly". Well, they flew and I had to spend th weekend in Middlesborough while the hoarders didn't.

A lesson learned

zag2me

isofa wrote: »

Panicking causes the problem.

That isn't to say you should panic with the rest of them!

mroller

even the FT is hosting a forum on whether NR custumers should be worried or not.

http://www.ft.com/cms/6c2bf1ce-91b7-11da-bab9-0000779e2340.html?a=tpc&s=646099322&f=141094803&m=4841070551&r=4841070551

Personally, I dont think NR will go bust, but I dont think it's a silly question either. Banks still go bust, just last month 2 banks had to be saved in Germany. (one was collapsing under losses, the other could not honor it's loan commitments)

The likeliest scenario is that NR will sack tousands of people and reduce their lending (because they will not be able to finance them) and try to adapt its business model to the new circumstances (eventually sold to another bank).

It's employees who should be worried most.

slipthru

I have a ISA with them with £3000 from last year. What would happen if they did go bust would i be able to reclaim my money?

littlesaint

I'd just like to point out that NR shares were 300p on mutualisation ten years ago. They remained at that level for about five years before they started their climb to 1200p. So people who were in it from the start, like me, have lost nothing.

gt94sss2

sikejsudjek wrote: »

NR is a sub prime lender, they even had a webpage up today still with an ad banner saying 'Open for Sub Prime Business' !

Yes the UK does have a sub prime, and NR is over exposed. They have lower deposit levels than other banks, and after today's run they will be lower still. Their entire business model of lending is risky, lending at 125% and 5-6x income, using finance from other banks at the Libor rate. The likely outcome is that they will be bought out by another bank. I don't see how they can survive. If I had savings in them, I'd move them out quick.

If you read the Northern Rock website, you would see NR have an agreement with Lehman Brothers (trading as Southern Pacific Mortgage Limited) who take the sub-prime business from them (thus taking all the risks) and simply pay NR a fee for 'introducing them'

So NR doesn't really care - as long as Lehman Brothers have taken over their subprime loans as they have..

Regards
Sunil

Nick_C

I think people who are saying NR could not possible go bust - the Govt will not let it happen - are being naive. Anything is possible, and as those of you who remember Black Monday/Wednesday will recall, the Govt can't control free market forces.

I consider myself lucky to have drawn my £32K from NR at the start of this week and put it into Tesco for an extra 0.2%. Right now, if I still had savings in NR, I would move it to Sainsburys. The loss of 0.05% interest is nothing compared to the possible loss of 10% capital.

If everyone stays calm, NR should survive, but of course people won't stay calm. People en-masse are not altruistic. Why take the slightest risk of losing hard earned capital when you can move it to a safe haven?

The internet age has totally changed the rules. We've seen this on the Stock Exchange when computer programmes have caused large distortions that would never have happened if the Gents in Bowler Hats has still been shaking hands with each other on the trading floor.

Immediate access to funds through internet banking (assuming that site comes back up) could well cause NR to collapse.

Alternatively, NR could force interest rates on savings back up in an attempt to attract new investment. This would in turn push up interest rates on mortgages and could trigger the crash in the housing market that many of feel is long overdue. The idea that the Bank of England could not control interest rates would have been unthinkable a few weeks ago.

Of course, none of this would have happened if it wasn't for the greed that has destroyed most of the Building Societies.

Would I buy shares in NR? Could be worth a punt, lets see how low the price drops!

cm233lh

isofa wrote: »

Panicking causes the problem.

...So there is a problem then?