Should I close my Northern Rock Account?

Grumpy_Old_Duffer

Soooo!, all the experts are saying not to panic, NR is a sound and strong business ..... but if you'd had money in Maxwells pension fund and/or a Pension Policy with Equitable Life I'm damned sure you'd be saying nothings safe. Where were all the safe-guards then!!
Personally, if I had money with NR (which I don't) I would definitely be with-drawing it.

...... and just how safe is safe? If the first £3k is covered by the government and the next £30k is covered upto 95% (or is it 90%), I don't really call that safe. Safe is only when you get ALL your money back.

roddydogs

Still cant get onto online banking, they just give you a phone No, needless to say you dont get answered this is NOT very reassuring!

Fedz

They're probably overwhelmed by the volume of customers withdrawing their monies!

Because NR are such popular mortgage lenders and they don't have a high savers ratio (unlike many other banks/building societies) they borrow money to sell on as mortgages ...etc (like they've always done), as banks are feeling a loan pinch, NR has had to borrow from the BoE ... it's that simple.

NR has over £4 billion in revenue, is one of the 5th largest mortgage lenders.

The BoE is their as a back-up and NR have (had too) use them to borrow money to sell on as mortgages (as usual) and carry-on making profit.

Dragging savings out of NR is understandable but, an over-reaction.

globalds

NR's Buisness plan relies on cheap interbank rates ...These don't look like falling any time soon ..Ironically NR is now adding to it's own misery ..By making banks even more nervous..A run on the banks is not going to free up a credit crunch..
The question of whether a buisness with an ill thought out core business plan should be bailed out by the Bank of England is ,when the dust settles ,going to be The one that will need answering By the Chancellor.

russellbarrett

what implications are there with everybody removing their savings?

roddydogs

Can all the NR threads be merged, too many now!

Fedz

russellbarrett wrote: »

what implications are there with everybody removing their savings?

Not a lot tbh as NR (like every bank/building society) don't rely on savers to keep in business, but wholesale borrowing from other banks and or more recently BoE to then in turn lend the money out ...

From my understanding NR have approx £25 billion by savers and around £1 billion has been withdrawn by savers - so what's that about 4%?

roddydogs

Update 09.00 Website STILL "Busy" try later
"Business as usual"? My A****

christineb_3

Has anyone manage to get on this web site today:eek:

olly300

Grumpy_Old_Duffer wrote: »

Soooo!, all the experts are saying not to panic, NR is a sound and strong business ..... but if you'd had money in Maxwells pension fund and/or a Pension Policy with Equitable Life I'm damned sure you'd be saying nothings safe. Where were all the safe-guards then!!
Personally, if I had money with NR (which I don't) I would definitely be with-drawing it.

...... and just how safe is safe? If the first £3k is covered by the government and the next £30k is covered upto 95% (or is it 90%), I don't really call that safe. Safe is only when you get ALL your money back.

It's 90%.

I think the problem here is the average Joe on the street doesn't remember history and forgets that financial products are all regulated under slightly different laws.

Company pension funds like the Mirror Group pension fund where all based on trust between the employer and the employee and as most large employers acted ethically there was little need for government regulation. After all it was employers like Cadbury's who were the ones who decided to work out how to treat their former workers so they didn't live in proverty in their old age. Unfortunately Maxwell was a greeding, thieving b!!!!ard and broke the moral agreement.

Equible Life stated a return that was too good to be true to get people to sign up to their pension products and where found legally accountable for misleading some of their customers. This means all their pension holders suffer including their own staff, who actually have pensions with the firm. (Obviously the chief ex and the board never suffer.)

Due to the Wall Street Crash and runs on banks in other countries in economic crisis the banking system here has evolved to stop any major retail bank/building society going under. This means the goverment backs individual investors money but in reality all this means that another bank/building society will buy the the ailing institution for a nominal sum and prop them up using their name and reputation, their investors money and the money markets. If they didn't do this the entire banking system in the UK would collapse.

what implications are there with everybody removing their savings?

A buyout will happen quicker as people won't want to take products from an insititution with a bad rep.

Is it guarenteed under any eventuality that this fixed rate period will remain is it possible that if 'bought out' by another bank they will be able to increase my interest rates?

The buying institution would do the same as with all takeovers if they want to get rid of the NR name. (Think Halifax taking over Leeds)

Withdrawal all NR products to new investors.

Keep the products i.e. mortgages, loans that have terms specifying interest rates the same for the time they have to as per the agreement. Then run them down to get people to switch to newer products.

Run down the interest rates of all savings accounts and other accounts that don't have agreed terms to get people to change.

If they want to keep the NR name then they would just leave things alone. (Think RBS taking over Natwest)