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Northern Rock braces itself for more withdrawals
(17-09-07) - Struggling mortgage lender Northern Rock opened its branches early today in anticipation of a third day of long queues, withdrawals and panicked customers.
Despite a statement from Adam Applegarth, Northern Rock chief executive, trying to calm savers, it is estimated that up to £2 billion has been withdrawn from accounts since it emerged that the bank had received an emergency loan from the Bank of England on Thursday.
In a statement on the Northern Rock website (see useful links), Mr Applegarth apologised for the delays faced by customers both in branches and online, due to the huge number of users logged on at the sane time. He said: “Your money is safe with us and if you want some, or all of it back, then you are perfectly entitled to it. Whilst you may have to wait a little longer than usual to receive it, you will get it,” adding that Northern Rock was a “solvent, adequately capitalised, well run bank”.
However, shares in the UK’s fifth largest mortgage lender fell a massive 32 per cent in morning trading today, and customers continued to empty their accounts. Shares in other banks also fell in anticipation of a possible knock-on effect. Alliance & Leicester shares fell by 14 per cent and Bradford & Bingley was also down 11 per cent.
Chris Eagle, CreditChoices.co.uk commercial manager said: “The majority of Northern Rock mortgages are funded with loans from other banks but in the current financial climate, following the crisis in the US over sub-prime lenders, these banks have become more cautious in their lending.
“However, the bank of England has approved a loan to the bank to ensure that anyone with money in a Northern Rock account can move their money if they’re worried.”
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