Northern Rock Crisis Article Discussion

dreamer33

Cozworth806 wrote: »

Reading the financial press at the weekend I am amazed that ML has not highlighted the most important part of NR's problems for savers, that they pay consistently poor saving rates. The ISA was quoted at something like 5% where is it is easily possible to get 6% elsewhere.

The reason to get your money out is not because it is unsafe but to obtain better rates, and that should always be done. People move mortgages to save money but don't seem to apply the same logic to reviewing and moving savings on a regular basis.

If you check all banks interest rates you may find the NRock offer very competitive % rates, check the NRock website, I have and the Fixed Rate ISA account is 6.20%. And all the other ISAs are above 5% except the instant access account. All banks give higher interest rates if there are more ties with the accounts, eg, fixed for 1yr.

Maybe after all you need to bank with NRock.

barak

dreamer33 wrote: »

Any bond which tracks the FTSE can only be closed upon death, I'm sure anyway.

Presumably you mean "can only be closed EARLY upon death".

dreamer33

I would like to bring to everyones attention that I fully understand people in the begining wanting to withdraw their funds in panic.

If we look at it closely the "MEDIA" have caused widespread panic more so than was necessary.

Take Barings bank they went to the bank of england and they would not lend them money (to risky), NRock went to the BOFE due to the banks becoming scared "interbank" and froze lending to each other. This is where the real problem lies. If lending between the banks was not frozen this would not have happened.

Northern Rock are probably the safest bank to be with for existing savers as the government have now stepped in an overidden the Financial Services Compensation Scheme where by you were only given a percentage now you would be given every single peny back.

The below note is on the BBC website under "Treasury Saver Guarantee":

The unlimited support for savers' deposits covers accounts that were in existence up to midnight on Wednesday 19 September.
It also covers accounts reopened in the future after being shut in the panic between 13 September and 19 September
But new accounts opened after 19 September will not be protected.
"This guarantee covers future interest payments, movements of funds between existing accounts, and new deposits into existing accounts," said a Treasury statement released to the stock market at 0700BST. "Since it would otherwise be unfair to other banks and building societies, the arrangements would not cover any new accounts set up after 19 September," it added.

dreamer33

barak wrote: »

Presumably you mean "can only be closed EARLY upon death".

Yeah, you may want to check the details you got with the account.

barak

MSE Dan has given an update on the situation for NR depositors - and the Treasury Press Release can be seen at
http://www.hm-treasury.gov.uk/newsroom_and_speeches/press/2007/press_96_07.cfm

As an account holder [Silver Saver 6.30%], I was interested to see that "new deposits into existing accounts" are covered by the guarantee.

However the statement that -
"The guarantee in relation to Northern Rock plc will remain in place during the current instability in the financial markets"
isn't very helpful. I would like to know whether NR depositors will be given any notice as to when this guarantee expires.

dreamer33

barak wrote: »

MSE Dan has given an update on the situation for NR depositors - and the Treasury Press Release can be seen at
http://www.hm-treasury.gov.uk/newsroom_and_speeches/press/2007/press_96_07.cfm

As an account holder [Silver Saver 6.30%], I was interested to see that "new deposits into existing accounts" are covered by the guarantee.

However the statement that -
"The guarantee in relation to Northern Rock plc will remain in place during the current instability in the financial markets"
isn't very helpful. I would like to know whether NR depositors will be given any notice as to when this guarantee expires.

I think there would be some kind of announcement when the guarantee expires, however for now its a very good guarantee. Its also a public Limited company meaning that the public have a right to know. Especially in cases like this one. It would not be in the public's interest not to be told any information relating to the guarantee.

bristolleedsfan

dreamer33 wrote: »

I think there would be some kind of announcement when the guarantee expires, however for now its a very good guarantee. Its also a public Limited company meaning that the public have a right to know. Especially in cases like this one. It would not be in the public's interest not to be told any information relating to the guarantee.

NR are pretty much in limbo atm, this time next week their shares will be ex dividend so that should provide a clearer picture of the value they are hanging around it.

id imagine that the treasury will be expecting something to change re northern rock while the guarantee is in force so that it wont have to be in a tricky situaton of removing the guarantee.

i read that not only is their the credit crunch banks were reluctant to lend to northern rock anyway as they were not perceived as a good risk.

ive had my NR shares for 10 years ill take the divi and sit on the shares till what is likely to be the bitter end.

MarkyMarkD

bristolleedsfan wrote: »

you are entirely wrong again, BOE had told NR that it would lend at a penal 1% above base rate, other federal banks were flooding their money markets with "cheap money", 1% above base rate was no use to NR at all after all what morgage business was it going to get charging 1%+ above base rate.

perhaps u should check your facts before you post, BOE have done a u-turn should NR borrow from BOE IT WILL BE @ BASE RATE.

http://news.bbc.co.uk/1/hi/business/7000035.stm

"The Bank of England also announced that it would inject £4.4bn into financial markets, offering cheap credit through a so-called emergency tender at a rate of 5.75%, in an effort to shore up crumbling confidence in the UK banking system"

I was tempted not to respond to your childish insults, but I'll do so anyway.

ALL banks have been borrowing money at 1% above BBR at the moment - that's what 3m LIBOR has been for quite a few weeks. NR are no different to that - indeed, they are less likely to have any choice about source of funds.

Lenders make money by borrowing at a mix of different rates and lending at a mix of different rates. Your question

what morgage business was it going to get charging 1%+ above base rate.

is simply stupid. A fair proportion of Northern Rock's back book will be paying a lot more than 1% above base rate.

The £4.4bn you mention isn't just for NR. It's been vastly over-subscribed - not surprisingly. It's different to the "overdraft facility" NR was already granted which was at the penal rates.

randalf72

According to one of the money experts on Radio 5 live this morning, from a certain perspective NR is now a nationalised bank.
If the government were to go the whole hog and fully nationalise it, what would happen to share holders and savers investments?
any ideas???

TIA

Randalf

harryhound

Shareholders: Same as Railtrack and British Leyland (Rover Group).