Northern Rock bank had £1bn withdrawn by depositors yesterday. The withdrawals are likely to exceed this today. Runs on the bank are very unusual in the UK. Northern Rock is the tenth largest bank in the UK. It is the first bank to approach the Bank of England, the lender of last resort, for 30 years. The BOE won’t let Northern Rock go under but given the run and the collapse in share price, it is unlikely Northern Rock will survive under this name with its current management. Don’t lend long and borrow short.
Morty Sill Forex Bias: Credit crunch – Northern Rock
June 28th, 2010 
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Thanks. You may well be right. I am not defending NR. I have not seen any information relating to the size of NR’s risk regarding sub-prime lending yet. This is one of the central problems: the money markets are unable to fully assess the risk when they lend to mortgage companies.
I am sure there are further events to come (I am trying to avoid calling everything a “crisis”) as homeowners come off their fixed rate deals to find interest rate increases of 1.5% or more.
The NR crisis wasn’t precipitated by mortgage defaulters (default rate less than 0.5%). However it was very vulnerable to a liquidity squeeze because of its business model. As you say, NR won’t survive. We will learn the extent of its sub-prime exposure when it is taken over.
Yes and they get what they deserve. I wish people wouldnt keep blaming the US problems, this is a UK issue – 125% @ 5 times income . haha
The NR stock value will go down on Monday.
Rubbish. Northern Rock is a sub-prime lender who have been having problems since March ’07 when it profit warned. The money market does not want to buy paper from Northern Rock because of its reserve ratio between loans and deposits. Northern Rock will be finished soon.