Northen Rock [Merged Threads]

mrp45

you're right I don't remember it well as I was very young at the time, but I do remember stories of people losing all they had. Maybe that kind of thing wouldn't happen to a UK bank if the BoE changed it's mind and decided to bail them out, but if not and they are sold to another bank then I wouldn't it will be the mortgage assets that are sold with savings being divvied up in administration.

Anyway, although my savings are a drop in the ocean to Northern Rock they are very important to me and so for peace of mind I would rather they were with a society that has not been so reckless in lending out my savings as to need emergency support.

chesky369

if you're really concerned, just keep your savings below the 35k mark and you will be covered by the refunding rules - if you have more than that then just move the surplus over to another savings account - there are hundreds to choose from.

MarkyMarkD

webdeepak wrote: »

Funny, MarkyMarkD I have heard you say that before.
Following forum should tell you why
http://forums.moneysavingexpert.com/showthread.html?t=545211

I think you should come out of the deep sleep you are in Or more fundametally Do you work for Northern Rock?

Also I say again, if hasn't happened before does not mean it can't happen now.

That's a thread, not a forum.

I don't work for Northern Rock.

But unlike you, I do know what I'm talking about.

!!!!!!? wrote:

Good advice Mark - in fact, why not transfer some of your personal savings to Northern Rock to show solidarity :rolleyes:

Northern Rock are notorious for their willingness to give out loans 'no questions asked'.

Despite the breathless guy on the BBC News assuring us that everything was above board, I suspect that their current predicament is not entirely unrelated to the relatively 'accommodative' stance that they took towards lending people extremely large amounts of cash without digging too deep into whether or not they could afford to repay.

I'll go further than that - I've got shares in NR. And I'm still not worried.

Your comments are completely incorrect. NR's financial issues are due to the way they fund their lending (and the amount of it they have recently been doing), not the way they choose to lend.

Whilst NR's lending is marginally more risky than other high street lenders', it is nowhere near sub-prime.

As I've posted ad nauseam, the worst that will possibly happen is that NR will be acquired, as a going concern, by another lender. There's no way savers are going to lose out financially.

chambta

!!!!!!? wrote: »

Good advice Mark - in fact, why not transfer some of your personal savings to Northern Rock to show solidarity :rolleyes:

Northern Rock are notorious for their willingness to give out loans 'no questions asked'.

Despite the breathless guy on the BBC News assuring us that everything was above board, I suspect that their current predicament is not entirely unrelated to the relatively 'accommodative' stance that they took towards lending people extremely large amounts of cash without digging too deep into whether or not they could afford to repay.

Seeing some of the mortgages they've given out I can agree with that sentiment. It's almost as if they have no underwriting procedure at all!

sprice27

To agree with the previous poster. NR will not collapse. The media will blow this up but it's not as bad as it looks.
Thanks to the cunning tactic (!)of mixing up the US sub prime loans with good quality business, the markets are nervous because they don't know who has bought what business and hence what exposure they have to potential defualt on the US sub prime loans. As a result inter bank/institutional lending is drying up until the market sees who has what.
NR - as a major mortgage lender - rely on purchasing funds on the market rather than using their own deposits as funding. They are struggling to raise capital for lending due to the lack of availability on the market which as I say they need more than other lenders. This doesnt mean that they are broke or going to go bust. It is a cash flow problem affecting their ability to finance future lending in the immediate future.
Customers have no reason to worry. And on the bright side we'll probably see savings rates go up...
So dont panic. Frankly if NR had an 8% bond going I would invest in it!!

EdInvestor

As the FT says...

http://www.ft.com/cms/s/0/6cdb3a98-6236-11dc-bdf6-0000779fd2ac.html

The Bank of England will on Friday bail out Northern Rock by providing emergency funding to the beleaguered mortgage lender which has fallen victim to the liquidity squeeze in the banking sector.In an unprecedented move, the Bank, working with the Financial Services Authority and the Treasury, will step in to prop up Northern Rock by providing it with a short-term credit line that will allow it to carry on operating. The bail-out, which has been approved by the Chancellor of the Exchequer, is the most dramatic illustration to date of how the British banking sector is being hit by the wave of market turmoil that has paralysed the money markets.
It will lift the uncertainty that has been hanging over Northern Rock’s future for much of the past month because it could not access the wholesale funding upon which it is heavily dependent. The Bank is also expected to reassure thousands of the bank’s customers that their deposits are secure.
Northern Rock is the first institution to be propped up since the Bank in 1998 revised the rules under which it will act as a lender of last resort to banks that have hit financial difficulty. The Bank is on Friday expected to say that a similar facility is available to any other institution facing short-term difficulties.
It is understood that there is no concern about the quality of Northern Rock’s mortgage book, which has no exposure to subprime borrowers, or its capital levels. But the bank, one of the UK’s largest mortgage lenders, has proved particularly vulnerable to the liquidity squeeze because it has a much smaller deposit base than other banks.

As you can see sprice 27 is right about the underlying problem:

NR - as a major mortgage lender - rely on purchasing funds on the market rather than using their own deposits as funding. They are struggling to raise capital for lending due to the lack of availability on the market which as I say they need more than other lenders. This doesnt mean that they are broke or going to go bust. It is a cash flow problem affecting their ability to finance future lending in the immediate future.

There is no basic problem with the bank or the quality of its loans.

alared

I know their website is usually as slow as a tortoise with a broken leg but tonight I couldn`t get through at all.

Must be a lot of people logging on to withdraw their money and I don`t blame them.

As soon as I can get connected the moneys coming out and going somewhere safer

---

like under the bed.

gbsilp

!!!!!!? wrote: »

Good advice Mark - in fact, why not transfer some of your personal savings to Northern Rock to show solidarity :rolleyes:

Northern Rock are notorious for their willingness to give out loans 'no questions asked'.

Despite the breathless guy on the BBC News assuring us that everything was above board, I suspect that their current predicament is not entirely unrelated to the relatively 'accommodative' stance that they took towards lending people extremely large amounts of cash without digging too deep into whether or not they could afford to repay.

Indeed. NR's self-cert mortgage (read as "alt-A" for US equivalent) consists of verifying your income over the phone at your place of work.
"Hello, this is BT how can I direct your call?"
"yes hello can I speak to Mr X please"
"speaking"
"yes, NR here, just calling to verify your income"
"80k"
"thanks, your docs are on the way"
"no thankyou (suckers)"

gt94sss2

gbsilp wrote: »

Indeed. NR's self-cert mortgage (read as "alt-A" for US equivalent) consists of verifying your income over the phone at your place of work.
"Hello, this is BT how can I direct your call?"
"yes hello can I speak to Mr X please"
"speaking"
"yes, NR here, just calling to verify your income"
"80k"
"thanks, your docs are on the way"
"no thankyou (suckers)"

Yes - but what most people miss is that NR have an agreement with Lehman Brothers who take the loans/sub-prime business from them (taking all the risks) and simply pay NR a fee for 'introducing them'

So NR doesn't really care - as long as Lehman Brothers take over the loans as they have..

Regards
Sunil

dippy

It appears you guys are not the only ones trying to log in to withdraw your money. From the financial times http://www.ft.com/cms/s/0/ec7f7016-6259-11dc-bdf6-0000779fd2ac.html:

"Early on Friday, anxious Northern Rock customers reported they were unable to access their online accounts following news reports of the Bank of England rescue.
It appeared the volume of traffic from depositors and mortgage holders had caused the website to freeze in an indication of the level of customer concern the bank is likely to face when it opens for normal High Street business this morning."