Northern Rock needs help from BoE

videotalker · 14th September 2007, 17:19

My mortgage is with Northern Rock, does that mean I don't have to pay now?

old golfer · 14th September 2007, 17:22

Quote:

Originally Posted by videotalker

My mortgage is with Northern Rock, does that mean I don't have to pay now?

Shares in one of the UK's largest mortgage lenders, Northern Rock, have fallen 32% after it had to ask the Bank of England for emergency funding. But experts say it does not mean Northern Rock, which has £113bn in assets, is in danger of going bust.
The bank has struggled to raise money to finance its lending ever since money markets seized up over the summer.
Other bank shares fell, with Bradford & Bingley, Alliance & Leicester and HBOS down nearly 8%, 7% and 4% respectively.
House builders were also hit, with companies like Persimmon, Taylor Wimpey, Bovis Homes and Berkeley Group falling around 6% and more.
The London stockmarket's benchmark index, the FTSE 100, at one point dropped more than 2.2% before recovering during the afternoon. The index closed at 6,289 - a loss of 74 points or 1.17%.

Karen1234 · 14th September 2007, 19:24

The Northern Rock has had to be bailed out by the Bank of England. Does anyone bank with them and are you fearful you will lose your savings

TonyB · 15th September 2007, 10:04

You have to hand it to Northern Rock; at least they owned up to difficulties due to withdrawal of lending lines.

The big problem then obviously occurred. Shareholders, in droves, panicked and sold their shareholding. Result - disaster.

Let's hope that there will be a quick upturn as opportunist investors buy at 'bottom', create increased interest and therefore, promote the share pricing. Some people could make a 'nice little earner' if the price rallies.

old golfer · 15th September 2007, 10:06

Quote:

Originally Posted by TonyB

Some people could make a 'nice little earner' if the price rallies.

SHHHHHHHHHHHHHHHHHHH.....

C.I.M · 16th September 2007, 22:24

Some good advice and answers to most questions here
Hmmm - very tempting stock price - especially with a few other banks lurking around looking to make an offer to buy!

PS - if you are in the UK or still go there a lot, please have a good look through that website - it is very very good and could save you an awful lot of time and money on a myriad of subjects from banking to mobile phones to god knows what else. Would be great to start a moneysaving section here for Tenerife!

hopper · 16th September 2007, 22:55

The stock price has a long way to fall yet (IMHO), tomorrow will see an early start to the selling of the shares.

The tide has changed for the stock, initally when the crisis hit, the withdrawals were at a managable level, indeed some would have said below what would have been expected BUT the weekend has been a hinderence to them, articles in the Sundays have not been encouraging, people have had time to reflect.

Everyone is now talking about a takeover, the chairman (or MD) has even hinted that the bank has no future as it stands. Any offer from a rival will be low to begin with, as such (I believe) the pension funds and major share holders who hold stakes in the bank will be looking to offload their stock for as much as they can.

I would have thought that the share price will fall by at least another 25-35% at least before any bid comes in.

Remember, any offer will be purely based on the debt the bank holds because there is no value in the brand or in the savers who are pulling their money out as I type and giving it to any potential bidder for FREE.

With further increases in the base rate expected, why would anyone look at borrowing funds to buy what will become a purely debt based business unless the stock price is such that its a bargain not to be missed. At the moment the share price isn't at that level.

But there again, what do I know, I sell trousers for a living

old golfer · 17th September 2007, 09:38

Nothern Rock shares plunged 24 per cent in early trading on Monday as the mortgage lender and its regulators prepare to try again to arrange a sale.As depositors continued to withdraw their savings from Northern Rock – with some reported to have begun queuing as early as 4am on Monday – people familiar with the matter said the bank and its advisers were planning a new push to find a “commercial solution” that would allow it to be sold as a going concern......

old golfer · 26th November 2007, 13:55

Northern Rock has confirmed that it has chosen a consortium led by Sir Richard Branson's Virgin Group as its preferred buyer for the stricken bank.
Virgin's offer - which has been backed by the Treasury - includes an immediate repayment of £11bn of the £25bn the bank owes the Bank of England.
If the bank's shareholders block the deal it could be nationalised or be taken into administration.
Northern Rock's shares were up 19% to 102.1 pence by early afternoon trading.
They had earlier leapt more than 48% after the immediate announcement of the Virgin news.
The Newcastle-based lender hit funding difficulties in September after world credit markets dried up, and it was required to go to the Bank of England for emergency loans to cover its day-to-day funding requirements.

Will it be good for UK banking as a whole ?....

hopper · 26th November 2007, 14:09

I would like to see the full figures or an explanation of the repayment schedule before I can make my mind up.

OK so the Virgin group are repaying £11BN of the public monies lent to the bank by the BOE but they are also hanging onto £14BN of this money also.

I would like to see schedules set out detailing exactly when we can expect our money back because that is what it is.

Also, I believe the BOE should be made a shareholder to the percentage of its outstanding debt as a portion of the value of the bank as a whole. That way, if the money is not paid back but the bank declares a divindend for its shareholders the BOE will get their %.

It would appear on paper a good deal for Virgin who up until now have not had a high street presence for its banking division.