Northern Rock shares plunge 31%, Paragon Group drops 17%, page 1

Northern Rock shares plunge 31%

news.bbc.co.uk

Shares in one of the UK's largest mortgage lenders, Northern Rock, were down by 31% after the Bank of England decided to offer it emergency funding.

But experts say it does not mean Northern Rock, which has £113bn in assets, is in danger of going bust.

(visit the link for the full news article)

[edit]

Title changed to match the current share drop.

Another edit to cover the post in thread showing mortgage group, Paragon group, dropped 17% today (was 26% at one point)

Shares in UK buy-to-let mortgage lender Paragon Group slumped as much as 26% as fears deepened over the ability of banks to finance their loans.

Paragon Group drops 26%


[edit on 14-9-2007 by infinite]

Also today, this has happened;

Credit crunch "may hit" UK economy
Pound hits 14 month low against Euro

This is VERY serious, the Bank of England and the UK Treasury has put funds aside on fears more lenders will need emergency funding.

Recession is the hot word now in the UK.

news.bbc.co.uk
(visit the link for the full news article)

Check out the latest pictures of people waiting outside the branches



Customers are in panic and removing all their money from Northern Rock

Share price has dropped 25% now

reply to post by niteboy82

---

Well yes I agree with you, but people see the headlines in the paper and on the news and panic.
Northern Rock is a quite solvent company.
As stated, the Bof E wouldnt have dished out money to it, if it didnt have the assets to back up the loans.

Wow, this is the first time I've heard of a modern run on a bank.

Are your deposits insured by the government there in Britain? Like our FDIC?

reply to post by djohnsto77

---

On the BBC news, but not on the website, it said something like

first £2000 is guarenteed 100%
next £23,000 is guarenteed 90%

They may not be exact, but you get the idea. Another thing of note is that regular bank accounts is not the main business of this bank, mortgages are.

Originally posted by infinite
The last bank that had to be bailed out by the Bank of England was the 1970s.

According to The Economist, the Bank Of England's Emergency Funds are used roughly once a month, but the borrowers largeley remain un-named.

In fact, Barclays bank took out a similar loan of £1.6 billion earlier this month from the BoE.

Economist Article

Originally posted by Paul
Economist Article

Very good article'

the end is very interesting, makes a good points;

Yet until banks own up as to who has lost what—difficult, since many are struggling to value what they own—even the best-educated guesses are shots in the dark. “We're pushing around information, but nobody has any idea of what's going on,” says one large holder of bank stocks, head down in a stack of analysts' reports. “We can only hope that the Bank of England knows more, or that these banks are too big to be allowed to fail.” Which is precisely the sort of thinking that got banks into this mess in the first place.

Hmmm... I wonder if this is the bank the Economist had in mind when they wrote this article last weekend?

A quiet crisis: The money markets smell a wounded bank

The gap between the rates banks pay to borrow money for three months, and that paid by governments, is at a 20-year high, suggesting that someone somewhere is believed to be in financial trouble.

the level of turmoil in the money markets suggests investors are seriously worried about a financial company going bust. Wouldn’t that have an enormous effect on economic confidence? And wouldn’t it be a major market event, given the importance of financial sector profits and the industry’s weight in global stockmarkets?

As for the mentality of the people lining up to get at their money... if you got wind that YOUR money was sitting in a troubled bank or fund YOU would also move it or try to get your hands on it.

Don't be a hypocrite try to tell me you would leave it there, laugh at all the "stupid people" in line and hope everything turns out fine for you.

Europeans are also savvy enough to know, understand and even remember financial hardships and events of the past, unlike their north american counterparts who live in a rosy world of make believe fantasy.

If I'm not mistaken I also read about a sort of a run on a financial institutions in California in recent weeks.

These are ominous signs of economic instability and perhaps a glance of things to come. Not to be taken lightly IMO.
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