Northern Rock Crisis Article Discussion

andrew_simpson

I have a 5 year NR Bond for £29.000 which has a year to run and gives me 115% of the Ft100's progress.
I feel I should sit tight.

Any thoughts Martin?

gilltess

I wish people would stop panicking, it's making me feel like panicking although I know there is no need. Just shows how much the general public know about financial protection. It only takes one person behaving hysterically to get a whole nation going. Hysteria breeds hysteria. I thought the FSA compensation scheme was common knowledge, obviously not. I have an online account with Northern Rock and of course I can't get through, judging by the queues at the branches, it's no surprise.
I know most of us mistrust the banks and have had run-ins with them, but we have to believe what has been broadcast time and time again, that our savings are safe.

MSE_Martin

I think that its a pretty good article, although I have one suggestion - is it worth mentioning the loss involved in withdrawing ISAs (and TOISAs) cash - quite a few people appear to be doing this, obviously losing an allowance which they won't be able to restore. Obviously the disadvantage of this is adding to the length, but I think it is an important point for people to remember.

Thanks for this suggestion - i've added it in.

As for this question

I have a 5 year NR Bond for £29.000 which has a year to run and gives me 115% of the Ft100's progress.
I feel I should sit tight.

Any thoughts Martin?

My assumption by what you describe is this is a 'Guaranteed Equity Bond' (do check) which is technically a deposit (savings) account and thus has the Financial Services Compensation Scheme protection.

alexandlee

I think you are going to to be very busy over the next few days Martin.
Please do tell everyone via GMTV, moneybox et al not to panic. I'm not trying to creep! but people really do take notice of what you say.

Didn't Barclays borrow funds from the b.o.e just about amonth ago too??

MSE_Martin

Don't worry I've been saying don't panic for days - i've been in most newspapers saying it and everywhere else - its tragic that this happened - when all that was really wrong was it set up an extra borrowing facility as a precaution!

B_Stewart

Hi there, Am brand new to this 'postings' lark. I have a loan with Northern Rock - Will someone else take over the repayments from this or what will happen?

B :rolleyes:

webdeepak

Does the FSA guarantee also apply for Business reserve offered by Northern Rock. I'm a small company and have the Business Reserve from Northern Rock..?

sdooley

The Barclays loan was an ovenight facility.

The NR one will be ongoing if it is used.

That said, don't be too worried if you are a saver there with a balance below the limits, unlike the shareholders you won't lose money so long as the bank stays solvent and even if it were to go bust the worst that could happen is you get the 90% protection - and 100% on the first chunk. Even that is hugely unlikely as their mortgage book is so valuable that any other bank would love to buy it - at the right price - and would need to bail out savers fully to cover face.

The people who could be hurt by this, and I have seen nothing on this in the press, are buyers who have arranged mortgages with Northern Rock, perhaps even exchanged contracts on a house, and not yet drawn down funds. People in that situation should rearrange finance elsewhere if at all possible - and actually by doing so may help NR with its finances as its problem is not trading income v expenditure (its costs are famously low and its default rate on mortgages also) but just that it needs to write new business and can't borrow the money to do so.

cledor

webdeepak wrote: »

Does the FSA guarantee also apply for Business reserve offered by Northern Rock. I'm a small company and have the Business Reserve from Northern Rock..?

I noticed that they state (on their website) that small businesses are sometimes covered by the compensation scheme.

Scotland_the_Brave

At long last some common sense comments and guidelines on the NR problem!. Some up front honesty by the company CEO drops it in the farm yard mug. Maybe a bit niave to trumpet it around the way they did and at the time they did but at least honest. I am keeping my five figure account at NR as I believe in it's survival and the importance of it being independendent.