Sunday, September 16, 2007

Northern Rock- Here’s What a Bank Run Looks Like

If you have read the news from Friday it is no wonder that the customers act first and ask later......

Nachdem man die Nachrichten vom Freitag mitbekommen hat ist es wenig verwunderlich das die Kunden erst handeln und dann Fragen stellen....

And what would you do when you read the not so "rock solid" data like this....

Und was würdet Ihr tun wenn Ihr die "grundsoliden" Finanzdaten lesen würdet.....
Northern Rock has £80bn in mortgages outstanding supported by just £2bn of shareholders’ equity and £78bn of mostly short-term debt.

And the company has set aside only 0.04% for bad debts. On an average mortgage lent of around £180,000, this amounts to a miniscule £67.

A big hat tip to my friends from Housing Doom & New York City Housing Bubble

Please check the comments for updates

Für Neuigkeiten in Sachen Northern Rock bitte die Kommentare lesen

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Blogger jmf said...

Estimated $4 billion pulled out of Northern Rock

11:52 PM  
Blogger jmf said...

King, BOE Face `Crisis of Confidence' Over Subprime Collapse

Two days after King, 59, told lawmakers on Sept. 12 that central banks should avoid giving the impression they will help lenders that made bad decisions, the Bank of England provided emergency funds to Northern Rock Plc in the biggest bailout of a British bank in three decades.

No wonder the Pound is "eroding"....

But he is still not worse than Trichet, Bernanke & Co

This is hardly a compliment :-)

12:00 AM  
Blogger jmf said...

Chart Northern Rock

Down another 10-15%.....

I would have been expected a much bigger haircut.....

Congratulations to all the people that bought the share because of takeover rumors.... :-)

12:07 AM  
Blogger jmf said...

Lex on Northern Rock: ‘All you can take with you’

12:19 AM  
Blogger jmf said...

Northern Rock chiefs push for fresh sale

Northern Rock, the troubled UK mortgage lender, and its regulators are this week expected to try again to sell the troubled mortgage lender after it was rescued last week by the Bank of England. As depositors continued to withdraw their savings from Northern Rock over the weekend, people familiar with the matter said the bank and its advisers were seeking a “commercial solution” to sell it as a going concern. Northern Rock held talks with Lloyds TSB, the UK’s fifth-biggest bank, as recently as last Monday but the talks were undermined by credit market turmoil and the Bank of England’s reluctance to offer financial support to facilitate a deal, the sources said.

12:24 AM  
Blogger jmf said...

Greed & Fear ‘flash’ edition: Why Northern Rock matters to the world

“King appears to have blinked at the first sign of real political pressure”.

The fact that the exact terms of the seeming bailout of Northern Rock have not been published “invites more suspicion than trust,” he says.

The reality is that the Bank of England is lending taxpayer money against dodgy mortgage collateral, a lot of which is very likely to turn bad. The British central bank governor has, therefore, massively accentuated moral hazard; which is precisely what King claimed on Wednesday he was determined not to do for fear of encouraging a future financial crisis.

12:36 AM  
Blogger jmf said...

Buiter, Sibert: Northern Rock will damage BoE’s credibility

2:01 AM  
Anonymous Klabautermann said...

Northern Rock - Ein von weinerlichen Süßwasserpiraten gekapertes Narrenschiff, welches verfrüht zum Karneval lud.

Die Meute ohne Umschweife 3x mal kielen lassen und anschliessend am Hauptmast kreuzigen. Schauerliches Getue und jämmerliches Rumgefuchtele von diesen Brackwassertommies, kann man sich nicht mehr ansehen ohne dabei zünftig aufzuwerfen!

4:01 AM  
Blogger jmf said...

Overnight Cost of Pounds Soars as Northern Rock Crisis Deepens

The overnight rate banks charge to lend pounds soared 60 basis points to 6.47 percent today, the highest in more than a month, according to the British Bankers' Association. The three- month rate fell 7 basis points to 6.75 percent, the BBA said. The gap between three-month rates and the bank of England's benchmark rate, currently at 5.75 percent, is near the widest in at least two decades. .....

4:53 AM  
Blogger jmf said...

Make sure you have no coffe n your mouth when you watch this thread from housepricecrash :-)

Northern Rock- No Words Just Pictures

5:14 AM  
Anonymous Anonymous said...

Markets don't seem to care much.


7:07 AM  
Blogger jmf said...

Moin Eh,

maybe they still believe the Fed will matter...

It will be fun to watch how the market will react after the cut tomorrow.

One market is finally acting... Gold and the pound is also weakening.

And with the magnitude of the UK bubble and the housing market showing the first yoy declines i think there is more to come. I´ll probably increase my pound short during the next days.

7:16 AM  
Blogger Harleydog said...

What we are witnessing is the breaking of the psychology. Once a cat sits on a hot stove it will not sit on any stove! This run at North Rock is huge as it relates to the psychology for when this breaks it will take years for the confidence to recover. Just look at the tech aftermath as a guidebook. The equity markets refuse to acknowledge.

9:14 AM  
Blogger Harleydog said...

what is occurring but they will. Good trading to you.

9:15 AM  
Anonymous Anonymous said...

This run at North Rock is huge as it relates to the psychology for when this breaks it will take years for the confidence to recover.

It's pretty clear that, in its current form, Northern Rock is finished as a financial institution -- it will either go under (unlikely now that the BOE so oddly seems to have deemed it 'too big to fail'), be sold, or taken private (an interesting article about this possibility in the FT recently).


4:12 PM  
Anonymous Anonymous said...

That N. Rock link w/ the pictures is a riot!

6:08 PM  
Blogger jmf said...

Moin Harley,

i agree that this is indeed a shift in sentiment.

I can see this also also in traffic on the blog and a shift from Northern America to more and more European visitors.

Moin Eh,

I found the first rumors about the takeover on Friday funny. Totally nonsense!

Northern Rock is done. Another player will take on the pieces. But still not clear if this is a bargain with the bubble just peaked the last quarter.

Moin Edgar,

i also love the British humor :-)

9:11 PM  

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