Monday, Sep 17, 2007
So will savers at all banks have their deposits guaranteed?
BBC: Northern Rock deposits guaranteed
Darling and the BoE come to the rescue of beached whale Northern Rock by guaranteeing the deposits of savers.
With at least one other lender being pummelled on the ropes and yet another about to be bloodied will the same guarantees secure savers at the other banks.
Also, I've not read the small-print of the guarantee but it "may" be a good time to buy back into Northern Rock.
Posted by denzil @ 06:51 PM (2406 views) Add Comment
63 Comments
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1. Mrbean said...
Will this be seen as good or will there be a panic? Hmmmm...
2. Ntone606 said...
Absolutely disgraceful. UK govt should not be bailing out incompetance and idiots who put more than £35k in a bank account.
3. Orwell said...
Highly suspicious when only on Sunday he would not commit.
Have they put Merv in the freezer?
4. Dude said...
Nationalisation, now there's a thought. Unfortunately it's probably going to remain a pipe dream, but a national standard for banking. Hmm. It would mean real controls on credit. Then they could introduce a national housing policy; let everyone rent their own home, at a peppercorn rate, for life (housing should be a right, right?). What, we haven't enough space? But I've seen all that land next to those big, posh houses. We wouldn't need much of it.
Ah yes, I can see it now. Utopia.
5. david20040_0 said...
Why is the British Government guaranteeing savings in banks at taxpayers expensive???????
This is just plain crazy!!!!!!!!!
Why should the taxpayer pay for the mistake of these banks?
6. harold said...
Socialism at its worst, i.e., we all pay for the excesses of the few.
Anyone for a punt on the Halifax?
7. david20040_0 said...
This is insanity, Northern Rock lent to sub prime people. It took a risk. Why should the tax payer have to bail out these banks?
If the Government supports all of these banks that have taken out dodgy loans then where is the risk aversion for the future.
Surely if the Government supports these banks it will prevent any sort of crash?
8. david20040_0 said...
We live in a supposedly capitalist country, let the market decide.
Oh wait I forgot Comrade Brown runs the country now, the Union of Socialist Kingdoms.
9. whiteknight said...
Now the UK puts its "credit" out front alongside the US ......
OK. Well the moves have been made , so on this particular path of the chess game, the interest is purely currency in a couple of moves.
5 moves to checkmate, your move.
10. mybrainhurts said...
NR savings accounts are now as safe as NS and I and safer than any bank or building soc. and the govt cannot argue its way out of giving the same guarantee to savers with b&b, a&l or anyone else because why should NR be treated as a special case? you couldn't make it up.
11. Mark said...
it wont prevent a crash it will make it much much worse... just delays it a bit...
12. voiceofreason said...
Did anyone else notice the average age of those in the queues outside NR ? I would say most were 60+.
No iPods, no flashy mobiles etc
Where did they get their cash piles from ... ? Property sales, that's where.
The UK govt obviously never heard of the phrase "easy come easy go".
13. C'mon Correction said...
Yes, most were elderly, but most won't use internet banking and so had little choice than to go to the branch.
14. Chris said...
Easy come - easy go?! But then they'd have to pay them a decent pension!
15. Ash4781 said...
Yep something odd about seeing the older generation frantically trying to get their property profits out while the youngsters can't even scrape a deposit together to get on the 'ladder' .
16. Scottow said...
I don't really think the Government had any choice. Once retired miners start talking to the press about how their burial money is at risk all the buttons will have been pressed. Bad luck for Cheltenham if Lloyds take NR over. Only south of Manchester do market forces apply.
17. Larry Pickleman said...
I'm not gonna pay my taxes if this keeps up!!
18. Wilee said...
A hypothetical question for everyone: Say there were 10 banks that take in savings and lend out loans and mortgages . Say one of them was suddenly regarded in such a poor light like NR that all it's customers deserted, withdrawing all their funds simultaneously and transferring them to the other 9 banks. In due course all mortgage obligations and loans would be sold on and transferred. Say the remaining 9 are very, very trusted and never, ever does anyone have any fear about these.
In this situation, the banking sector has effectively been streamlined, a bit like when 2 companies merge. In this fictitious situation, if the same amount of business in/out was sustained, then why should/would the government get involved? In order words, if one company goes bust simply because it hasn't made very prudent decisions - or even through no fault of its own but simply by consumer fickleness - so what? That's their look out, isn't it?
As the government ARE getting involved, what conclusions can you draw instead?
19. Quiet Guy said...
Yes, david20040_0, I think you are absolutely correct.
The government absolutely depends on consumer spending driven largely by house price appreciation (to say nothing of the personal investment that some MPs have in housing). When the 'feel good' goes, the electorate will punish Brown.
If Darling has already agreed to bail out a failed bank, then this augers very badly for the future.
Open question for HPC contributors: What is the best way to protect my savings against inflation?
20. nacho99 said...
Government is just doing what they have to do.
They are seeing people panic and are stepping because they are happy that the £100+ billion pounds of mortgages NR has will cover the £24 billion in savings.
NR will still have problems raising money from the markets for new mortgages and the shareholders are still not going to get all their money back so its not a bailout as such.
House prices will still crash.
21. This comment has been removed as it was found to be in breach of our Blog Policies.
22. japanese uncle said...
Seriously speaking, failure of a bank with the size of N/R's could have led to ful-scale systemic event via chain reaction. That's why GB and AD did what they did. Besides, many people piled up suprisingly huge savings, some even one million quids in N/R. If tens of thousands of them lost those savings, the matter could have developed a tremendous political implication, possibly fatally shaken the basis of the labour govt. .
23. harold said...
"...possibly fatally shaken the basis of the labour govt."
Now wouldn't that be a shame.
24. whiteknight said...
Thesis starts:
You can go to countries in Asia and still live like a Lord at current currency conversion rates.
They have fanstastic technology, are innovative and aggressive and dont think they are entitled.
When we can drag ourselves from the wine bars and coffee shops we ponce around selling old houses to each other and boasting about how much they are worth.
Currency revaluations are on the horizon.
Thesis ends.
25. Logic said...
what does guarantee mean? 100%,?...does it cover bonds and isa, ? the intrests?
Q) a man buys 1000 kg sugar at £1 per kilo, and pays £1000 to shop keeper.
the sugar remains with the shop keeper who claims his sugar will increase in value and the man can sell it back to someone else at a profit.But warns the price can also go down.
a month latter the shop keeper reports sugar is only worth 50 pence a kilo, so the man will loss £500 if he sells.the man does not sell.
another month latter the man notices sugar price is going down as everyone is selling their share in sugar,untill price is 2 pence and the man sells his share too.the man losses £980,
who has his money? who has the money of all others who have also made a loss?
(if you belive you know the answer , than can you tell me the beneficiary of lost share value of several million pounds in NR , when it dropes from £14 to £2.50?, that is a loss of over £2 bilion+, who is gainer? or do you belive it just disapears like magic?)
26. harold said...
whiteknight
Agreed, we have a debt-ridden economy that produces very little, except for financial services of course (no scoffing please).
27. Alan said...
NR will be sold off or split up in chunks for the other banks to take. Wait and see. After all, the Northern Rock name will only be remembered as a beached whale.
It's a pity really - if only the BoE were more compliant NR could have been taken over months ago and this hiatus wouldn't have happened. As it is the BoE can now appear to justify its existence, New Labour can point to "a crisis solved" when they caused it anyway.
..... MMMmm Politics....
Once the IRs drop, we are only a few steps away from rapid inflation. Lets see who can be blamed for that....!
28. hoyo said...
Will the queues still be there tomorrow ?????
I'm calling Yes the old people will still be there the trust has gone.
29. japanese uncle said...
GBP could lose 50% of its value, I reckon. Yet, due to the affordability constraint in UK for years to come, there should be no severe inflation, but standard of living will slide considerably. No moreholidays overseas, but Butlins; Parents can no longer afford to buy their kids Playstation 3, but conkers, No more new Toyotas but used Hyundais. What's wrong? After all these are the best people could afford without crazy cheap credit pushed by banks.
30. Ticktock said...
I can't quite believe that many of you still seem to think New Labour and their capitalist casino economy are remotely 'socialist' !!!!
They are State capitalists protecting a floored capitalist model from being revealed for what it is. This happens every time the system 'misfires' and always has, regardless of the 'political party' at the wheel.
Of course Socialism has its own problems, but casino capitalism is not usually one of them.
We havn't had a Labour Government in Britain since the 70's, and we have never had a socialist one.
31. Nmarks said...
To me, the government offering to guarantee protection to private instutions now is akin to when Norman Lamont tracking the Deutschmark.
It was then and is now a political gesture not an economic measure.
32. tyrellcorporation said...
What would you lot do?
Trust the government to stump up the cash in the event of a total meltdown or get the rest of your cash out and stick it somewhere safe?
...exactly!!!
I'd be amazed if NR pull out of this nose-dive.
33. Alan said...
Thanks JU,
Indeed the £ could lose much of it's value in the severe inflation which may come our way.
Most of my neighbours have "Equity Released" to get new Harleys, lots of long haul trips and new 4x4 tractors to get them through the tough Essex winter.
It will be a nightmare listening to them all moaning at once.....! I'll have to buy a gun.
34. Orwell said...
And the nose dive will continue as well in pretty much the order the stiock exchange have it...
Paragon Finance (loss 42%), Alliance and Leicester (loss 32%) .... Bradford and Bingley...
35. sold out said...
does anyone have any money invested with A&L? Could there be another panic to get savings from there?Has anyone tried there website yet to transfer funds?
36. enuii said...
Talk is cheap and it's something this government in particular is extremely good at, as usual they will in the main sit on the sidelines watching events unfold whilst thinking how best to capitalise on the situation in order to look good in the eyes of the celebrity/soap opera obsessed sheeple.
37. japanese uncle said...
Financial compensation scheme was drastically degraded in 2001; it used to cover 100% up to 30K. If this reasonable rule remains to this date, such unsightly/disgusting event as seen in recent days did not take place first of all. The scheme should be reinstated!! Incidentally the Japanese financial compensation scheme guarantees 100% up to 10 Mil. yen ie GBP45000. I think N/R will be taken over for the price of a pound eventually.
38. japanese uncle said...
Sold out said;
I withdraw 99% of my money from A&L successfully today. FYI.
39. sold out said...
Thanks JU.
I have just successfully transfered some money from A&L to my current account.I might go down to NR tommorow and stick it in there seeing as darling is giving me a 100% guarentee.I wonder if the staff will give me priority in the Q?
40. sold out said...
Anyone have any thoughts on Nationwide or Halifax?Could they also be exposed?Anyone got any ideas?HELP where can i put my money where its gonna be safe?
41. david20040_0 said...
If the Alliance and Leicester was to start displaying the problems that Northern Rock is suffering from right now, could Darling really promise to bail out another bank?
How could he afford to? Could the taxpayer really be expected to bail out all of these banks? Why can't we just let the markets decide because if banks aren't allowed to go under surely this will avert a housing crash?
42. uncle chris said...
I used 50% of my A&L savings to purchase NS income bonds today - no problems with the website. By the way, does anyone think it significant that Darling only guaranteed deposits during the "current" financial crisis. I just wonder who defines what is current, and if NR go to the wall in 12 months time when they finally admit to holding large numbers of defaulting subprime mortgages, do you think this guatantee will remain? You have to be very careful with the wording where new liebour are concerned - look at slippery bliar for the perfect example.
43. Scott said...
Forget the banks. Buy gold, not gold shares, but actual gold. And then hide the gold underground in your own property, because when the shit hits the fan, governments have been known to raid deposit banks. Take a lesson from those in dodgy countries. Other such valuable recession proof commodities include heroine, ammunition and diamonds, but if I were you I would stick to gold.
44. denzil said...
japanese uncle said:
>>Seriously speaking, failure of a bank with the size of N/R's could have led to ful-scale systemic event via chain reaction.
Bang on JU. I don't like what the BoE have done but the knock-on was starting to look really ugly.
45. wiltshire said...
The government are going to do all they can to avert a housing crash (believe it or not).
As someone said talk is cheap and they'll just keep saying whatever they need to say to keep people happy. If the government REALLY cared about the current situation they'd have started addressing it about 5 years ago (i.e. just after 911 when the western governments went into cheap credit overdrive). Trouble is for them, it's becoming more and more apparent that we're in for a very rough ride. This site has been discussing these issues for years and always known it would be when it hit the mainstream media that the real trouble would start. The fact it's the lead item on the all the mainstream news shows suggests to me the game is up already and we've just got to watch GB et al going through the motions for the sheeple, pretending they're trying to save the day.
I think they know what's coming (meltdown) but they are hopeful it can be avoided, they're praying it can be avoided but if it happens they'll just do their utmost to squirm out of any responsibility.
46. denzil said...
sold out said:
>>Anyone have any thoughts on Nationwide or Halifax?
My brother-in-law is one of those sods on million plus bonuses in the city. In a drunken conversation one night quite a few weeks back he told me to watch NR. He mentioned two others. He has been completely correct thus far.
Neither were Nationwide or Halifax.
47. sold out said...
uncle chris
how can u buy ns income bonds?is there a website?what sort of return do u get from them?
48. sold out said...
thanks denzil.
Thats reassuring to know.I reckon the words of your drunken brother in law are more credible than our elected politicians.Hope so any way.
49. david20040_0 said...
So Halifax are definitely safe?
Time to start shifting some cash. Their interest rates on Websaver are only 5.3% though.
50. crash bandicoot said...
Huw Edwards refered to "Northern Wreck" on the 10 o'clock news tonight. How Freudian is that?
51. uncle chris said...
Sold Out ....... you can find out about NS&I Income Bonds at
http://www.nsandi.com/products/ib/index.jsp
The rates are lower than some internet accounts, but the 100% safety has been built in from the start - not just on the whim of the Chancellor, see more at ...
http://www.nsandi.com/products/ib/rates.jsp
52. Acidrob said...
so instead of queuing up at one of the hundreds of Northern Rock branches to get your cash - everyone will have to queue up outside the 1 Bank of England! lol
53. wiltshire said...
Did anyone see Newsnight? They were talking to a queue outside a NR branch and the general consensus seemed to be the people in the queue don't believe the government. It's about ******* time Liebour were given something to think about, they've had such an easy ride these past few years. Teflon Tony indeed, got out just in time as we all knew he would. I bet GB is livid at this sudden turn of events, 10 years of Iron Chancellorship being questioned not just by the economics editor of the BBC but by the man in the street! "How very dare they!" I reckon Darling's announcement today has put the brakes on a snap election too cos GB must know if he goes to the polls this autumn he's just going to looked ******* scared. HA! Make the ******* earn their salary for a change.
54. uncle chris said...
Just found the chancellor's actual words .....
"Should it be necessary, we, with the Bank of England, would put in place arrangements that would guarantee all the existing deposits in Northern Rock during the current instability in the financial markets."
That to me is anything but "clear beyond any doubt". Who decides if it's necessary? What arrangements will be made and will they be made in time? What about new deposits? Who defines when the current instability ends. I'm sorry but this statement is so full of loopholes through which he can crawl. I would not trust anyone that makes things so ambiguous. Maybe I have just become cynical in light of all the deception that new liebour have practised in over the past 10 years.
Remember that they promised to legislate against student fees - do you really trust them?
55. Bhuvar said...
Its been a while since I posted on here, looks like all my previous posts are coming to pass. The best place to put your money in times like these are in Gold. 5000 years of wealth preservation versus 10 years of liebours "economic miracle". I know where to put my cash :)
56. Jonathan said...
sold out,
I withdrew all my money from A&L about two months ago, for entirely unrelated reasons. I needed to use some of my savings to buy a new car, and A&L was the one paying the lowest rate of interest, so the money came from there.
57. Orwell said...
Spot on Uncle Chris.
You know about Solicitors' undertakings and how serious those are. My words are always "...will undertake to use our best endeavours to ...."
Spot on... Completely insupportable gesturing....
58. sold out said...
Thanks Uncle Chris,
I shall have a look at buying some of those nsi income bonds tommorow.
I Agree when u read slippery AD actual words his guarantee ammounts to nothing.These government ministers are finally,after 10 years of an easy ride showing themselves up to be really useless.And where the F##Ck is Crash Gordon hiding?
59. paolo88888 said...
This NR episode is a storm in a tea-cup. By taking out a loan from the government in place of issuing mortgage backed securities, NR is just "switching suppliers". This doesn't normally cause a panic amongst consumers.
Several days ago the Chancellor said the gorvernment would "stand by the bank". But it didn't stop the old biddies queueing. Now he has said that the government will "guarantee existing deposits", which is basically the same thing. And it isn't really necessary anyway because the bank is solvent. If savers didn't panic and withdraw their money, the loan would only have been needed to write new business.
Retail deposits are not an important part of the NR's business. They don't offer the best rates, except possibly on their "Silver Saver" account - hence the queues of old biddies. Its time these people went home and made themselves a cup of tea.
At least these queues of misers queuing for their half millions has shown that we are not all a nation of MEWing debtors.
60. wiltshire said...
I would guess that the government know NR is fatally wounded. It'll be bought up by someone else real quick. The government's promise at that point will be unnecessary as NR won't still exist???
61. Nelson said...
Am I the only one who feels sorry for all the pensioners having to queue for hours outside NR? This is life and death for many retirees - having your only-source-of-income-until-you-die threatened is no laughing matter...someone should provide chairs for them to sit down on instead of laughing at them as panic merchants. And there are no young people there because other generations don't believe in saving for tomorrow. Plus many old people aren't familiar with the internet and haven't the option of doing it from home - its stacked against them. Old fashioned banking indeed.
62. Jj said...
According to the loan to deposit ratio charts that are out HBOS is no 3 at risk above Alliance and Leicester. No one seems to mention HBOS but they are a risk.
63. waitingfor hpc said...
I have nearly all my money in NS & I - you just ring up and buy income bonds on the phone - it is an instant transfer. I moved my money about 3 months ago - and sold my HBOS shares for nearly £10 each!!!!
I think that Nationwide & HBOS may wobble only if / when UK house prices do start to drop as they have huge assets in property.