Northen Rock [Merged Threads]

melbury

caveman38 wrote: »

Melbury. I have contacted NR and you can surrender the fixed rate bonds early. Penalties for doing so are loss of 60, 90 or 120 days interest for 1, 2 and 3 year bonds respectively. You can go to a branch if you're lucky enough to live near one (my nearest is Chelmsford, 30 miles away but they do not have the facility, but I can go to Bromley Kent and wait 3 hours and get the cash). Alternatively you can DL a form off their site and post it.
The thing is say you have £40k invested in a 3 year bond. You start to weigh up the different scenarios.
1. Everything returns to normal. No loss.
2. NR is taken over assets and liabilities by another bak. No loss (hopefully)
3. NR go bust and you apply for the FSA safety net. Loss £10.3K
4. You cash in the bond early. Loss of interest £690 (assuming 5.25%)

I've decided to stay put, hoping for 1 or 2.

Thanks for the information caveman. So if you cash in and lose 60 days interest, do you still receive any interest on the investment at all?

Also one bond is in my name and one in my husband's name - would the FSA safety net cover both of us? It would still be a tremendous loss, sadly more than your illustration shown above. I think I will do the same as you, sit tight and cross everything. How long do you have to wait for your bond to mature? The next six weeks are definitely going to drag for me!

old_codger1

Yant1 wrote: »

Better then losing £970,000

The run on the bank has continued today, is there enough paper money in existence I wonder.

You're going to withdraw £970k in paper money? What are you doing, decorating your home with it?

caveman38

I've got another 9 months of a three year bond. Things will have gone one way or another by then.
Regarding different named bonds. The info I read was that they will be treated as individual bonds not lumped together. Even bonds in joint names are treated as 2 bonds when FSA use their formula for cmpensation. That is if you had a £100K bond in joint names you would receive 2 X 31.7K = 63.4K.
Of course if you have that much money the loss of interest is fairly substantial as well.
The return you get off your bond will include interest up to date minus 60 days GROSS interest ( that's a crafty one as well)
It's all a juggling act, listening to all the advice, deciding who to beleive and then go for it.
I think all the info is correct.

dunstonh

waste of time and money what they have done.

Paying to get their money out of a solvent bank on the basis of inaccurate and misguided information is daft.

old_codger1

Jem8472 wrote: »

I am guessing if NR did go t*ts up then some other bank would buy their debts for a fraction of what they are worth. So you would just owe money to another bank.

Thats what I think, am I right?

I have a NR mortgage as well but TBH I am not too worried about this. Maybe apart from all the panic withdrawal of money people are doing at the moment. Could cause more problems to NR. But hey I am no expert.

There's no reason to think that the assets of NR will be sold for a 'fraction' of their real worth. They will almost certainly realise near their full value. Their bad debt level is roughly half the industry standard, (that's kinda why I said where can you put your money if they go broke ), and they'd be a good buy for another institution.

Asset sales at vastly reduced figures usually happen when there are few takers. As NR's debt book is actually high quality that shouldn't be a problem.

One thing that WILL alter, though, is the level of mortgage payment, not just for NR but for anyone offering mortgages. The interest rates will go up, probably for some time to come. Maybe not a good time to buy that big house you've been dreaming about.

nearlyrich

I can't understand the panic either it's completely crazy, the bank protection scheme covers each account for about £20k, today's Daily Mail was full of glum looking pensioners who had been queing for 6 hours to draw out their £5000. No doubt it's all now stashed under the bed.

lartin_mewis

NR are still on target to make about £500m profit by year end aren't they?

More a liquidity problem than a solvency problem surely

mk-donald

FYI: NR's online Silver Savings a/c system was at 5:30pm today Saturday:
(a) letting one log-in instead of just saying 'too busy, try later' as on all previous attempts
(b) working responsively/normally once logged-in

gelato_cat

Because it doesn't sell newspapers

Suze

Mine's_a_guinness wrote: »

It annoys me that the media only seem to be interviewing the panic stricken folk who are queuing for hours to withdraw all their savings. This media attention will only panic more people. Why don't they also report on the thousands, like myself and others, who have savings with NR but are staying put. Maybe if there was a bit more of a balance in reporting there would be less of the headless chicken syndrome.

[Deleted User]

lartin_mewis wrote: »

NR are still on target to make about £500m profit by year end aren't they?

More a liquidity problem than a solvency problem surely

Based on old figures and data, this debacle will cost them a lot of money and its going to severly dent profits im afraid.

To say the share is a buy because of the p/e, profits etc is all based on estimates made when the markets were as they were. The figures now given that the markets are as they are wont be released.

Think about it, one day you could borrow at a interbank rate rate from japan at 2.5% the next day teh markets are closed and you need to borrow from the BOE at 7%. The city knows it thats why the markets opened on friday with an enormous bulk of short sales.

Bad news for house prices as mortgages will need to be at least 9% within a year. Plus I think theyll be stopping subprime business.