http://www.gata.org/node/5497

Britain sees a bank run
Submitted by cpowell on Fri, 2007-09-14 15:55. Section: Daily Dispatches
Northern Rock Customers Queue for Cash

By Emma Thelwell
The Telegraph, London
Friday, September 14, 2007

http://www.telegraph.co.uk/money/main.jhtml;jsessionid=XBV5D2AH3XHJZQFIQ...

The credit crisis spilled onto Britain's high streets today as worried Northern Rock customers queued up to withdraw their savings.

Their fears were prompted by the revelation this morning that Britain's fifth-biggest mortgage lender had to ask the Bank of England for emergency financial assistance.

Despite Northern Rock's assurances that there was no need for customers to panic, queues continued to build steadily at the London branches visited by the Daily Telegraph today.

For 65-year old Tony Looch, with savings of £135,000, the lender's calming words were not enough.

"I'm prepared to wait as long as it takes. I'm taking the lot out, if they'll let me have it," said Mr Looch, who was queuing outside the bank's Moorgate branch, in the heart of the Square Mile.

"I'm absolutely appalled that they should be so badly run and so badly regulated. I thought they were totally reliable and secure -- they're supposed to be regulated these companies."

Northern Rock shares had plunged more than 20 percent by early afternoon after the lender slashed its profit forecasts and admitted it was seeking help from the central bank.

Based in Newcastle, Northern Rock has 76 branches around the UK, has about 1.4 million savers, around 800,000 mortgage customers, and retail deposits of £24 billion.

Earlier in the day, Adam Applegarth, the company's chief executive, sought to calm the nerves of customers and shareholders alike: "In these extreme times we are pleased to have a high quality asset based and remain confident in the excellence of our strong customer franchise, our efficient business platform and our well-known brand."

However, the words appeared to carry little weight with the more than 200 people lining up outside Northern Rock's branch in Kingston, Surrey.

One pensioner, who did not want to be named, told The Daily Telegraph: "I am 65 and my husband is 72. We are queuing because we have substantial amounts of money invested in Individual Savings Accounts with Northern Rock.

"They say don't panic but it will be too late if things go wrong. I know that you need to keep level headed about these things, be we are not youngsters who can afford to lose this money."

Vasily Smirnov, a financial planning advisor from rival bank Abbey in Kingston, was handing out leaflets to Northern Rock customers advertising Abbey's super saving range.

An Abbey spokesman said: "Clearly Abbey staff are taking the initiative and ensuring Northern Rock customers are aware of other highly competitive savings deals."

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we're not the only ones feeling freaky about the economy right now...

I started a run on my bank today since the weekend is coming up and I'm about to have some fun.

I guess I'm gonna
have to stuff all
my money in my
mattress from
now on!

This is very real, and reminiscent of some of the smaller banks/credit unions/investment houses of the 1980's -1990's..

My father recieved back 12 cents in the dollar, when the credit union he had his money in, went belly up....and that when you do the math even on a $100 000 is really scary...$12 000 is all he received back of his money..after two years.

And no he didn't have all his eggs in the one basket, that was a smaller investment, he had made, however, during the recession of the 1980's and 1990's interest rates on mortgages went from 8.75 % to 19.5 % in the space of a few years, if that long.... how would your mortgage look if it doubled in a year?

Thanks Davinci...I like to have one eye on how the rest of the world is faring.

I think the rest of the world is more aware than we are...denial is pretty strong in america...

can't happen here..can't happen here...can't happen here...

I guess we'll just have to
get ready for the soup and bread line.

http://concise.britannica.com/ebc/art-82328/Women-serve-soup-and-bread-to-the-unemployed-during-the

It was brought on by the credit situation in the US.

There have been a huge number of repossessions in the US due to people not being able to pay their mortgages.

So the main lenders in the US that normally fund the Northern Rock are very wary about lending any more.

So the Northern Rock is now struggling to fund its UK mortgage business.

It reminds me of the early 90s. I had both my houses repossessed as the interest rate went from 12% to 15% in 6 months and my mortgage payments nearly doubled!

So glad I live in a trailer on a gipsy site in abject poverty, or if I owned a house, I would be homeless in abject poverty!

I remember when my mortgage interest rate in the late 70's was
25 - 30% ....I barely hung on that time...this time..not so sure...

Paul Volker did that for you.

The deposit customers of the Northern Rock have withdrawn huuuuuuuge amounts and the share price has dropped 32%

But they still say they are solvent and havent actually used the loan from the Bank of England.

Northern Rock have something like a fifth of the mortgages in the UK.

If they go down, then approximately 5 million homes will be affected.

Im not sure how, but thats a scary amount!

Yes, I'm sorta wondering when it will happen here in The North American Union.

I just DONT DO banks!!!