Saturday, September 15, 2007

Northern Rock Customers Withdrew 1 Billion Pounds on Friday

Exodus of Northern Rock savings feared

Is this the start of a re-run of the 1930's as Northern Rock customers withdraw 4% of the banks cash deposits in 1 day.

Posted by enuii @ 01:15 PM (1682 views)
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16 thoughts on “Northern Rock Customers Withdrew 1 Billion Pounds on Friday

  • It’s more than that – apparently NR only have £5bn or so in “branch deposits”, so it’s 20% of those gone in one days, and hundreds of people queueing up today to take out even more.

    This is “It’s A Wonderful Life” all over again, innit?

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  • I get the feeling other banks may follow NR into difficulty – A&L, B&B? Any mortgage lender with a high reliance on taking money from the Banking industry is vulnerable. The Banking industry will be asking for riskpremiums, not anticipated when the lenders mortgages were commenced.

    By the way, where are NRs ex-savers putting their £1bn now? Will they tuck it under the bed or buy gold sovereigns?

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  • Well, well….it’s all going somewhat pear-shaped now, isn’t it?!! …and with regards to the UK “It’ll never happen here” housing market – finally there is acknowledgement that house prices are falling across most of the UK. Can’t wait to see August’s Land Registry report at the end of the month!! http://www.worldofwillbee.com

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  • Who knows – but I saw a report that said that enquiries at National Savings and Investments (i.e. government bonds) were up 20% in the past week.

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  • So if a high enough percentage of people withdraw their savings from all banks and put them into NS&I, could this spell the beginning of the end for the banking system as we know it? Would banks have to rely on governments for money, if they couldn’t get it from individual savers? Would banks then be controlled by govt?

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  • “By the way, where are NRs ex-savers putting their £1bn now? Will they tuck it under the bed or buy gold sovereigns?”

    They walked out of the front door of NR and deposited their savings in the Bank across the street.

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  • It’s really changing up a gear isn’t boys and girls, we are looking more and more like the guru’s of the future and less like the home renting, gold freaks that have spent years being chastised and ridiculed at the pub and dinner parties.

    Just dropped onto the BBC website to look at the chat room they are currently running on NR, a number of genuine high street investors who are worried have posted concerns and a number of so called expert money bloggers going on their telling them they are being stupid for taking the cash out because they don’t understand the money markets.

    So to you who say their isn’t a problem, don’t pick on the innocent entry level retail investor come and argue with the big boys… Come challenge us on this site and watch your *rs* get kicked!

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  • Su, question is what collateral do certain governments have? Most of the world developed economies are ridiculously light on real security themselves, Australia, South Africa, Russia, Middle East and other countries with natural resources are in strong positions. Obviously so are China & India as they turn raw material into useful day 2 day goods.

    The UK gov finances are in pretty bad shape, we have a virtual economy (namely white collar workers producing nothing of physical value), small gold reserves, nothing to privatise and to top it all North Sea Oil which has unfortunately nearly run out, so no Maggie Thatcher type escape either.

    The US is in even more trouble unless they expand their physical empire and take over somewhere like Oz, SA or Middle East! This is probably the only way that US will stay as THE global super power.

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  • Su, sorry point being certain central banks wouldn’t be able to bank role their own economies anyway, the UK most definitely being one of them. We may have to rely on someone else saving us, but at what cost?

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  • I wouldn’t be surprised to see cashpoints starting to run out of cash as people start to realise the only money they really have is the cash in their pockets. Remember debit and credit cards are just bits of plastic they can be switched off at the drop of a hat. Cash, cash, cash, cash is king.

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  • Im a northern Rock invester and have been assured that there is not a problem.. so thats fine!

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  • I thought NS&I was government owned. Have I got this wrong? I thought anyone investing in NS&I was giving their money directly to the govt.

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  • I started looking at this site about 18 months ago and was certain that house prices would fall 10-12% in 3 months. History proves that I was wrong. The more I look at the wider situation and read the “subtle nuances” in articles and consider the standpoint of politicians and VIs, I get the nasty feeling that the central banks will conspire to drop IRs and let inflation accellerate.

    I do hope I’m wrong again, for the country’s sake !

    A drop in IRs would certainly help NR by keeping House Prices (unacceptably) high, giving less mortgage defaults, these being solved with sales, not messy, costly (negative equity) reposessions.

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  • Ref – a number of so called expert money bloggers going on their telling them they are being stupid for taking the cash out because they don’t understand the money markets

    Or is it more that the money markets don’t understand people?

    The people who are pulling their life savings out of a ‘bankrupt’ bank (while they still can) would seem to me to have a little more understanding of ‘money markets’ than those who trust the soothing words of a bankrupt banks CEO, or a shitting it BOE/ FSA.

    When has any senior figure during a crisis ever said ‘ you’re right, it’s time to panic’ or ‘its worse than you all think, run for the hills’ ?? Never. By the time anybody even suggests that it is a serious problem (if indeed it is) the time to have saved your deposit will have long passed and everyone with any sense knows it. Why would anyone take the chance, what is do be gained by leaving your money with them?

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  • NSANDI are government owned yes, but as far as I’m aware they are the only UK financial vehicles (income bonds, premium bonds etc.) that are 100% secure – according to the website anyway. So for anyone with over £32,000 (of which they would get back 90% if their bank folded) who don’t mind getting 0.5% less interest than they get with the banks, they seem to be the safest place for your money. I would imagine most big withdrawels from the reckless banks would head that way. I cannot imagine a situation where any government (even New Liebour) would not honour that 100% safe commitment. This very morning I’ve shifted another batch of savings from an A&L account into Income Bonds – which pay 5.59% but maintain instant access.

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  • The cash is going to be hidden under the bad for the foreseeable future, after an enormous panic getting the cash out. Don’t forget the society we live in. I bet there was one in the queue and another in a car ready to pick up and go before street crime occurred.
    So there is a billion under beds right now. What would you do? You just spent all day getting your life savings out of one bank, I don’t think you would immediately deposit with another.

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