Word: rocks
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Dates: during 2000-2009
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...savers at British bank Northern Rock, the days of worry may be waning. But it took a bold intervention by the U.K government to accomplish. Hoping to stem depositors' panic about the Northern Rock's solvency after it announced last week that it had requested an emergency line of credit from the Bank of England (lengthy lines of customers waiting to withdraw their savings have been a frequent sight outside Northern Rock branches for days), Alistair Darling, Britain's Chancellor of the Exchequer announced yesterday that the government itself would guarantee the bank's customers' money in the (very unlikely...
...Northern Rock, the U.K.'s fifth-biggest mortgage provider, came unstuck when the wholesale loan markets it leans on for a huge slice of its funds dried up amid the global squeeze on credit triggered last month. An emergency, short-term credit line, agreed with the Bank of England late last week, was supposed to reassure savers their cash was safe. Northern Rock, insisted the Financial Services Authority over the weekend, was "open for business...
...Until Monday's grand gesture, the more the authorities tried to sooth, it seemed, the greater the panic. With no sign of the run on Northern Rock ending - savers have so far yanked out well over $4 billion - the panic began to spread. Alliance & Leicester's stock plummeted by almost a third on Monday despite a statement insisting its business was solid; shares in Bradford & Bingley dropped by 15%. Desperate to restore order, the U.K. Treasury put its own money (meaning the public's money) down. "I want to put the matter beyond doubt," Darling said. Customers' cash held...
...asks Justin Urquhart Stewart at Seven Investment Management in London: "Anyone wishing to buy that asset book at discounted value." Lloyds TSB, another major U.K. lender, could well figure among any suitors to emerge in the coming weeks. It's understood to have been in talks with Northern Rock about a deal just days before the Bank of England rescue. If there's no appetite for taking it on whole, Northern Rock could be broken up. And should no credible bids be forthcoming, it may even be forced to wind...
...Further fallout from the squeeze on credit could yet follow in the U.K. Northern Rock's rivals Alliance and Leicester and HBoS similarly rely on liquid credit markets, albeit to a degree that's "smaller in magnitude," Collins Stewart's Potter wrote in a research note Friday. But the anxiety's not limited to Britain. Spooked investors dumped shares in Spanish, French and German banks Monday. Northern Rock, in other words, may not be the last financial institution to find itself in a hard place...