Northern Rocky
Posted on September 14, 2007 by Richard Beddard
Filed Under Companies, Markets |
It sounds portentous: On the Financial Services Authority’s recommendation, and on the chancellor’s authority, the Bank of England is providing “liquidity support“, aka a “bail out”, to Northern Rock in the form of credit at penal rates guaranteed against its assets.
The FSA says Northern Rock is solvent, exceeds its capital adequacy requirement, and has a good quality loan book. The problem is it can’t borrow the money it needs to fund its loans because of what’s widely regarded as a temporary credit squeeze.
More gory details in Northern Rock’s Trading statement, and a train of news releases here.
Blogs etc:
Traders in the Interactive Investor Northern Rock discussion are speculating so wildly it is, frankly, difficult to keep up.
Felix Salmon of Portfolio.com:
…while everybody else was tightening their underwriting standards, Northern Rock kept on lending, capturing 19% of all new UK mortgages in the first half of this year. The problem is that the Northern Rock didn’t have any money to lend, and when they tried to borrow the money on the capital markets, the capital markets were closed.
Robert Peston of the Beeb, says the good news is the authorities think Northern Rock is a viable business, and customers probably have no need to panic:
But its reputation has been badly damaged.
Which normally means that there will be a clear out of top management and also that the business may well be sold.
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10 Responses to “Northern Rocky”
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looks a prime target for a takeover at current stock value, certainly worth buying in and waiting for the sharks to take the bait
Mervyn King can say what he likes, Northern Rock is going down the pan !
It still amazes me how this sheep like mentality has resulted in panic withdrawl of funds. There is no way the BOE will allow Northern Rock to go under - by then end of next week, customers of the bank will have wondered just what all the panic was really about.
Nothern Rock’s “greed” is going to be engraved on the Rock for ever because of management fault.
Northern Rock did one unforgiveable thing - closed down their internet access to savings accounts. Sorry, but I signed up for 24 times 7 times 365 - it’s what internet banking is all about. Site can go down a few hours - acceptable but access has been impossible since Thursday and yes I did try in the wee early hours of the morning when the site would not have been busy and still could not access my accounts. This should not happen” Was going to pull about 30% of savings out - ended up queing at a branch for 5 hours on Saturday and took 95% out. Lack of confidence in the ’system’ you bet. Do not need this hassle in life!!!!!!!!!!!!!!!Trouble is where do you put money now? Any Ideas?
maybe some more drops monday morning; great news for speculators cos at anything under 400p they’re a bargain, there’s gotta be a private equity company lurking somewhere ready to pounce on this one and take it right back up to 700 or so
No reason to suppose saver withdrawal flow will cease. There is no rate incentive to keep funds at NR so if in Joe public’s mind there is a perceived NR credit risk why not withdraw funds? If you fear systemic banking risk (dominoe effect)savers can opt for safety(at a cost),& put money in HMG backed funds.
Concerning shares & with only private investor info, guessing a profitable share price is a leap in the dark. If NR finds a white knight or is broken up shareholder interests are bottom of the pile.
RIP
use countrywide financial (cfc) as a trading model.it has begun to rebound in the us mkts,and it has billions of dollars in loans. the short positions were only doing well for about three weeks. most traders are returning to tech in the us and canada to balance financial stocks.
[…] And on the Interactive Investor mothership, Ceri Jones says the bail-out of Northern Rock is the first big tangible sign that the credit crisis cannot be contained . Private investors have a lot to say too! As for me, you can read it here, here, here and here […]
Let NR go under………..NR has been a shambles since day one a dodgy business plan from day one, the Directors etc who cooked up this lending / borrowing strategy should be arrested as they new exactly what they where doing (Criminal act in my opinion)they new this would happen it was just a matter of time…….
I don’t want the goverment spending tax payers money on propping up a damaged Brand Like Northern Rock…..My advice get your money out and invest in a bank with a sound business plan….NR is not worth saving….enough said I think !